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Modi asks India Inc to keep investment flow going

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Sumit Mazumdar source: timesofindia.com
Sumit Mazumdar
source: timesofindia.com

By NewsGram Staff Writer

New Delhi: Prime Minister Narendra Modi on Tuesday urged India Inc to use the current opportunity offered by global turmoil as an advantage and keep its investment flow going. He said that this situation must not be seen as gaining from someone’s pain.

 

“The prime minister said that somebody’s pain shouldn’t be our gain. Instead, we should make our own efforts domestically to take up the opportunities from the current global situation,” Confederation of Indian Industry president Sumit Mazumdar cited him as saying at a meeting here with union ministers, corporate heads and economists to discuss the global markets’ turmoil sparked off by the Chinese economic slowdown and attendant opportunities for India.

 

Our economic foundations are strong, that is why we have not been affected by recent Chinese events. However, the prime minister told us that in this situation we should, as an industry, also show some risk-taking ability,” he told media persons after the meeting.

 

The meeting, that lasted over three hours, discussed the global situation that impacted India economically like a possible hike in the US Federal Reserve rate, the world powers’ nuclear deal with Iran contributing partly to cheaper oil and the way the Chinese slowdown opens up opportunities.

 

Finance Minister Arun Jaitley remarked that India was transiently impacted by recent events in China. He further added that the global situation instead presented an opportunity for the country as it is a net importer of commodities and oil is in free fall.

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“India is one of the lesser impacted economies (by the China devaluation), partly because our own fundamentals are reasonably strong,” Jaitley said while briefing reporters.

 

“The main thrust of the meeting was that since India is relatively touched little except for a transient impact on the markets, it should therefore strengthen its domestic economy so that the larger benefits of the global economy may come India’s way,” he said.

 

“Being a net importer of commodities globally, the low oil prices are an opportunity for us,” the finance minister added.

 

Global crude oil in free fall touched the $40-a-barrel mark in trading late in August, having already dropped under $50 for the second time this year from the level of over $100 last year.

 

“The general consensus was that the growth of emerging economies is all slowing down, except that we (India) are growing at seven percent. So how can we take advantage of this opportunity (of slowdown elsewhere),” said Mazumdar after the meeting.

 

“The prime minister said this is an opportunity for us to take advantage of and invest. Cost of capital is too high but I don’t know how many people can go ahead to take risk and invest… many of us raised the issue of interest rate,” said Federation of Indian Chambers of Commerce and Industry (Ficci) president Jyotsna Suri.

 

“The Chinese slowdown means that for India, which has a lot of untapped potential in infrastructure, the costs of creating it are going to come down with lower input costs like steel and cement,” said Subramanian.

 

With inputs from IANS

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China’s Economy Slows As It Tries to Diffuse Trade War With U.S.A.

The impact on China’s economy from the Sino-U.S. trade frictions are not apparent yet, Mao cautioned, adding that the nation will face more “external” uncertainties in 2019.

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China
A woman cleans the window at a Aston Martin luxury car dealership in Beijing, Dec. 12, 2018. Auto sales have fallen sharply in China. VOA

China’s November retail sales grew at their weakest pace since 2003 and industrial output rose the least in nearly three years as domestic demand softened further, underlining rising risks to the economy as China works to defuse a trade dispute with the United States.

The world’s second-largest economy has been loosing momentum in recent quarters as a multi-year government campaign to curb shadow lending put increasing financial strains on companies in a blow to production and investment.

The slowdown in Chinese industries has started to weigh on consumer sentiment this year, tapping the brakes on retail sales. Big-ticket items have been the first to be hit, with auto sales declining since May.

Pace of retail sales slows

Retail sales rose 8.1 percent in November from a year earlier, data from the National Bureau of Statistics showed Friday, below expectations for an 8.8 percent rise and the slowest since May 2003. In October, sales increased 8.6 percent. Auto sales fell a sharp 10.0 percent from a year earlier.

 

China
People try garments at a retail and wholesale clothing mall in Beijing, July 16, 2018. China’s economic growth slowed in the quarter ending in June, adding to challenges for Beijing amid a mounting tariff battle with Washington. VOA

 

The slump was in line with data released by China’s top auto industry association, which showed sales dived 14 percent in November, the steepest drop in nearly seven years.

The stresses on broad activity have been compounded by a sharp escalation in China’s trade dispute with the United States, which has threatened to fracture global supply chains, chill investment, exports and growth.

Pace of industrial output slows

Industrial output rose 5.4 percent in November, missing analysts’ estimates and matching the rate of growth seen in January-February 2016. Factory output had been expected to grow 5.9 percent, unchanged from October’s pace.

Over the weekend, China reported far weaker than expected November exports and imports, reflecting slower global demand and waning domestic factory activity as profit margins narrow.

With economic growth at its weakest since the global financial crisis, Chinese policymakers are ramping up spending, pushing banks to increase lending and cutting taxes to shore up businesses and ward off a more damaging slump.

USA, China, Trade War, economy
Plastic bags of fentanyl are displayed at the U.S. Customs and Border Protection area at the International Mail Facility at O’Hare International Airport in Chicago. VOA

The weaker November industrial output and retail sales growth numbers showed that downward pressure on the economy is increasing, said Mao Shengyong, spokesman at the statistics bureau.

Still on track to hit growth target

But China is on track to hit its 2018 economic growth target of around 6.5 percent, Mao told reporters.

“On balance, the latest data show an economy that is under pressure on both the external and domestic front, with policy efforts to shore up growth still falling short,” Julian Evans-Pritchard, senior China economists at Capital Economics, wrote in a note.

A temporary 90-day trade war truce agreed by the United States and China early this month may have removed some of the immediate pressure on the economy.

Also Read: The Escalating Trade War Between China And U.S. Calls A Truce

The impact on China’s economy from the Sino-U.S. trade frictions are not apparent yet, Mao cautioned, adding that the nation will face more “external” uncertainties in 2019.

Indeed, even in the unlikely event the world’s top two economies reach a durable resolution in their dispute, ebbing domestic demand, mounting household debt and a cooling real estate sector point to a further slowdown in growth next year. (VOA)