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Govt pegs FY19 GDP growth at 7.2%; estimate lower than RBI prediction

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New Delhi:The economy is likely to grow at a slower pace in the current financial year (2018-19, or FY19) than what was previously expected despite a significant rise in investment and manufacturing activities, showed the latest data released by the Central Statistics Office (CSO).

Gross domestic product (GDP) is pegged to grow at 7.2 per cent in FY19, lower than the Reserve Bank of India’s (RBI’s) estimate of 7.4 per cent and the finance ministry’s projection of 7.5 per cent. However, it is higher than last year, when the economy grew at 6.7 per cent.

Based on the CSO’s first Advance Estimates, GDP growth is expected to dip sharply to 6.8 per cent in the second half (H2) of FY19 from 7.6 per cent in the first half (H1). By comparison, the RBI had pegged economic growth to average 7.2 to 7.3 per cent in H2FY19.

 

The finance ministry did not seem perturbed by these figures. “Very healthy advance GDP growth numbers for 2018-19. India remains fastest-growing major economy globally,” Economic Affairs Secretary Subhash Garg tweeted.

The International Monetary Fund (IMF) has projected China’s economic growth at 6.6 per cent in the current calendar year. The Advance Estimates are lower than the IMF projection of 7.4 per cent.

Nominal GDP (at current prices) though is expected to grow at a healthy 12.3 per cent in FY19, against the Union Budget’s assumption of 11.5 per cent. This implies that inflation is estimated to stand at 5.1 per cent. This rate is surprising since the consumer price index inflation has cooled to 2.3 per cent in November, with an average of 4 per cent in the first eight months of FY19.

Gross value added is projected to grow at 7 per cent in FY19, up from 6.5 per cent in 2017-18 (FY18).

Advance Estimates are released for the Budget-making exercise and are useful for calculating various ratios such as fiscal deficit and gross fixed capital formation (GCFC), among others. These are based on the actual data for six to eight months. The Budget is likely to be presented in the Lok Sabha on February 1.

Economists, however, advised caution with regard to these numbers.

SBI group chief economic advisor Soumya Kanti Ghosh termed advance estimates a conservative one. He said, “The estimate has a shelf-life of only two months.”

The second advance estimates are slated to come on February 28.

Ranen Banerjee, partner, PwC India, said, “The estimates seem to be on the conservative side and the final numbers would depend on three factors — how the oil prices, thus inflation, pan out; government spending in the last quarter before elections; and the mood of the economy after the conclusion of the US-China trade negotiations.”

On the production side, growth is expected to get a fillip from manufacturing and construction.

Manufacturing is expected to grow at 8.3 per cent in FY19, up from 5.7 per cent in FY18. Construction is projected to grow at 8.9 per cent this financial year, up from 5.7 per cent in the previous financial year.

chart However, manufacturing activity is expected to slow down sharply from 10.3 per cent in H1FY19 to 6.4 per cent in H2FY19. The construction sector is expected to grow at a faster pace, from 8.2 per cent in H1 to 9.5 per cent in H2.

In the services sector, the CSO expects trade, hotels, transport and communication services as well as public administration to grow at a slower pace in FY19, while financial, real estate, and professional services are expected to grow at a marginally faster pace.

Agriculture is projected to grow at 3.8 per cent in FY19, marginally higher than 3.4 per cent in FY18. However, this is susceptible to a downward shock, given that the rabi progress has not been very satisfactory, said Madan Sabnavis, chief economist at CARE Ratings.

On the expenditure side, the first Advance Estimate suggests a moderation in both private and government consumption expenditure.

Private final consumption expenditure is expected to slow marginally, from 6.6 per cent in FY18 to 6.4 per cent in FY19, while government consumption expenditure is expected to moderate to 9.2 per cent in FY19, down from 10.9 per cent in FY18.


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Business

US to eliminate Iran oil sanctions waiver for India, 7 others:Report

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Washington: The United States is expected to announce that all importers of Iranian oil will have to end their imports shortly or be subject to US sanctions, a source familiar with the situation told Reuters.

The source confirmed a report by a Washington Post columnist that the administration will terminate the sanctions waivers it had granted to some importers of Iranian oil late last year.

US President Donald Trump has been clear to his national security team over the last few weeks that he wants the waivers to end, and national security adviser John Bolton has been working the issue within the administration.

 

The US reimposed sanctions in November on exports of Iranian oil after Trump unilaterally pulled out of a 2015 nuclear accord between Iran and six world powers Washington is pressuring Iran to curtail its nuclear program and stop backing militant proxies across the Middle East.

Along with sanctions, Washington has also granted waivers to eight economies that had reduced their purchases of Iranian oil, allowing them to continue buying it without incurring sanctions for six more months

They were China, India, Japan, South Korea, Taiwan, Turkey, Italy and Greece.

But on Monday, Secretary of State Mike Pompeo will announce “that, as of May 2, the State Department will no longer grant sanctions waivers to any country that is currently importing Iranian crude or condensate,” the Post’s columnist Josh Rogin said in his report, citing two State Department officials that he did not name
Frank Fannon, US Assistant Secretary of State for Energy Resources, repeated the administration’s position that “Our goal is to get to zero Iranian exports as quickly as possible.

“Other countries have been watching to see whether the United States would continue the waivers. Last Tuesday, Turkish presidential spokesman Ibrahim Kalin said that Turkey expects the United States to extend a waiver granted to Ankara to continue oil purchases from Iran without violating US sanctions.

Turkey did not support US sanctions policy on Iran and did not think it would yield the desired result, Kalin told reporters in Washington.

Washington has a campaign of ‘maximum economic pressure’ on Iran and through sanctions, it eventually aims to halt Iranian oil exports and thereby choke Tehran’s main source of revenue.

So far in April, Iranian exports were averaging below 1 million barrels per day (bpd), according to Refinitiv Eikon data and two other companies that track such exports and declined to be identified.

That is lower than at least 1.1 million bpd as estimated for March, and down from more than 2.5 million bpd before sanctions were reimposed last May. Brent crude futures , the international oil benchmark, were up nearly 2 per cent at USD 73.25 a barrel, on the report that the waivers were to end.

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Maruti drives in Baleno with BS VI compliant petrol engine

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New Delhi: The country’s largest carmaker Maruti Suzuki India (MSI) Said it has launched its premium hatchback Baleno with BS VI emission norms compliant petrol engine, priced between Rs 5.58 lakh and Rs 8.9 lakh (ex-showroom Delhi).

The auto major has also introduced two variants of the car with smart hybrid technology. The trim with 1.2 litre DUALJET, DUAL VVT petrol engine is priced at Rs 7.25 lakh, while the Zeta variant is tagged at Rs 7.86 lakh. As per the company, the models with smart hybrid technology would deliver a fuel efficiency of 23.87 km/litre.

“At Maruti Suzuki, we strive to bring newer, better and environment friendly technologies to our products. Baleno Smart Hybrid with BS VI stands testament to the same. We are confident that the premium hatchback Baleno will present a complete package in line with aspirations of evolving customers,” MSI Senior Executive Director Marketing & Sales R S Kalsi said in a statement.

 

The company said in order to achieve the stringent emission regulation requirement, it has upgraded both engine hardware and software along with exhaust system.”Baleno is country’s first premium hatchback to be offered with Smart Hybrid technology,” it added.

MSI has sold over 5.5 lakh Baleno units since its launch in 2015. It sold more than 2 lakh units of the hatchback in the last fiscal year.

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SpiceJet, Emirates sign MoU for code share partnership

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Mumbai: Budget carrier Spicejet announced signing of an initial pact for code share partnership with Gulf carrier Emirates.

The reciprocal partnership will allow opening of new routes and destinations for passengers of the two airlines, SpiceJet said in a statement.

“I am delighted to announce that as part of SpiceJet’s international expansion strategy, we have signed a Memorandum of Understanding (MoU) for a code share agreement,” SpiceJet Chairman and Managing Director Ajay Singh said in the statement.

 

SpiceJet passengers from 51 domestic destinations will be able to access Emirates’ network across the US, Europe, Africa and Middle East, it added.

Code-sharing allows an airline to book its passengers on its partner carriers and provide seamless travel to destinations where it has no presence.

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