Weekly News 10 - 14 July 2023

Domestic

10 July 2023 – (Business Today) Goldman Sachs predicts India will overtake US to become world's second-biggest economy by 2075.[1]

According to Goldman Sachs, India has the potential to become the world's second-largest economy by 2075, surpassing the United States, Japan, and Germany. The country's large population of 1.4 billion people is expected to drive significant economic growth.

Goldman Sachs Research highlights the importance of enhancing labor force participation, providing training and skills, and leveraging India's favorable demographics. The report emphasizes the significance of innovation, increased worker productivity, and capital investment as drivers of India's long-term economic growth.

India's gradual demographic transition, low dependency ratio, and infrastructure development provide opportunities for manufacturing, services growth, and continued infrastructure development. The report also discusses the need to increase labor force participation, risks to economic growth, and the significance of transitioning to green energy, aligning with global sustainability goals.

11 July 2023 – (Economic Times) GST Council Meet: 28% GST on online gaming; SUV, MPVs' price hikes & other key decisions.[2]

The Goods and Services Tax Council has decided to impose a 28% GST on online gaming, horse racing, and casinos, without distinguishing between games of skill and chance. This move is expected to negatively impact the gaming industry and hinder its competitiveness.

The council also announced a reduction in GST on food and beverages in cinema halls from 18% to 5%. This clarification will treat the supply of food and beverages in cinema halls as a taxable restaurant service.

Additionally, the council increased the cess on utility vehicles (UVs) by 2% to 22% and tightened registration norms. However, sedans were not included in the increased GST rate. The meeting also exempted GST on the import of the cancer drug Dinutuximab and food for special medical purposes used in the treatment of rare diseases.

12 July 2023 – (Economic Times) ‘CBDC Aims to Make Cross-border Transactions Cheaper’.[3]

The Reserve Bank of India (RBI) aims to achieve one million retail CBDC transactions per day by the end of the year, prioritizing more efficient and cost-effective cross-border transactions.

The current correspondent banking arrangement is deemed inefficient and costly, with cross-border small-value transactions carrying a high fee of 6%, according to World Bank estimates.

To increase CBDC adoption, the RBI plans to leverage the Unified Payment Interface (UPI) network, introducing interoperability for CBDC transactions. This eliminates the need for separate CBDC QR codes, making transactions easier and faster. Thirteen banks have already implemented partial interoperability, with full implementation expected by the end of the month.

13 July 2023 – (Bizz Buzz) India-Thailand trade set to be $20 bn in FY24. The Royal Thai Consulate-General, Chennai, wants to connect the think-tank between both countries.[4]

Bilateral trade between India and Thailand is expected to reach $20 billion in the financial year 2023-24, surpassing the previous record of $17.7 billion in the last fiscal year. The trade volumes have been steadily increasing, rebounding from the decline during the pandemic, and various collaborations and partnerships have contributed to positive trade sentiments between the two countries.

The Consul-General of Thailand in Chennai anticipates further growth in trade and commerce, particularly in sectors such as solar energy, construction materials, and chemical products. The upcoming BIMSTEC Summit, which India's Prime Minister Narendra Modi will attend, is expected to strengthen the relationship between India and Thailand, potentially elevating it to a strategic partnership. Education and people-to-people connections are also areas of focus for enhancing bilateral ties.

14 June 2023 – (Econmic Times) Foreign banks in India: Mission Impossible.[5]

Foreign banks in India are facing challenges, with some exiting or scaling down operations, potentially due to global business strategies rather than stricter compliance requirements. However, India's strong growth potential and resilient domestic demand make it important for foreign banks to reinvent themselves and explore opportunities in the country.

Despite demands for concessions and challenges, foreign banks have the potential to contribute to India's economic growth, particularly in areas like capital raising, external commercial borrowings, and rupee-denominated bonds. The government has created an enabling environment, particularly through initiatives like GIFT City in Gujarat, which can attract more foreign banks to set up operations and support the country's development goals.

14 June 2023 – (Economic Times) Commerce Ministry to seek cabinet nod for Indo-Pacific supply chain agreement.[6]

The Indian Ministry of Commerce and Industry is set to seek Cabinet approval for signing and ratifying the Supply Chains Agreement under the Indo-Pacific Economic Framework (IPEF). The agreement aims to establish an IPEF Labour Rights Advisory Board, address labor rights inconsistencies, identify critical sectors and key goods, and strengthen supply chains. It includes provisions for review and withdrawal. The agreement requires Cabinet approval as it is an international agreement. The IPEF consists of 14 countries, including India, Australia, the US, Japan, Fiji, Korea, New Zealand, Singapore, and Thailand. The agreement also seeks to reduce dependence on China and streamline trade processes..

International

10 July 2023 – (Captive Insurance Times) Asia to drive global economic growth, says Swiss Re report.[7]

Asia, particularly emerging Asian markets including India, Thailand, Indonesia, and Malaysia, is expected to be the main contributor to global economic growth in the coming years. Swiss Re Institute's sigma report forecasts a growth rate of 5.4% for emerging Asia in 2023/24, with non-life premiums in the region expected to expand by 6.7% and 6.2% in 2023 and 2024, respectively.

China is predicted to experience stronger growth in 2023 compared to 2022, driven by domestic consumption, particularly in the service sector. However, the report suggests that this growth in China will have limited spillover impact on the global economy, and the global outlook for disinflation remains unchanged. Despite an economic slowdown, global insurance premiums are forecasted to grow by 1.1% in 2023 and 1.7% in 2024, driven by factors such as rate hardening in property and casualty insurance, improved combined ratios, and stronger investment returns.

11 July 2023 – (Drishti) PM lays Foundation Stone and dedicates Development Projects in Bikaner.[8]

Prime Minister Narendra Modi inaugurated various development projects in Bikaner, Rajasthan, worth over Rs 24,300 crore. These projects included the six-lane Greenfield Expressway section of the Amritsar-Jamnagar Economic Corridor, Phase-I of the Inter-State Transmission Line of Green Energy Corridor Bhiwadi Transmission Line, and a 30-bedded Employees' State Insurance Corporation (ESIC) Hospital in Bikaner.

The Greenfield Expressway section, spanning 500+ km, will improve transport connectivity, reduce travel time, and boost tourism and economic development along its route.

The Inter-State Transmission Line will integrate renewable energy, strengthen transmission capacity, and support grid balancing between western and northern regions.

12 July 2023 – (Economic Times) One factor that can put India ahead of the US as the 2nd biggest economy.[9]

India is projected to overtake the US to become the world's second-largest economy by 2075, according to Goldman Sachs Research. India's GDP is expected to grow from $2.8tn in 2020 to $52.5tn in 2075, surpassing Japan and Germany on the way.

The research notes that innovation and increasing worker productivity will be important factors in India's growth, and that the country's large and educated population is vital. The labour force participation rate, particularly among women, will be a key part of achieving this growth, as will increased investment and deeper financial sector development.

13 July 2023 – (Outlook) EAM Jaishankar Holds Talks With Counterparts From Indonesia, Malaysia, Australia, Laos And Vietnam.[10]

External Affairs Minister S Jaishankar held meetings with counterparts from several countries, including Indonesia, Malaysia, Australia, Vietnam, and Lao PDR, discussing bilateral cooperation, regional issues, and mutual concerns. They explored various areas of collaboration such as finance, cyber, maritime domains, trade and investment, energy, and cultural cooperation.

Jaishankar emphasized India's commitment to ASEAN centrality and its strong engagement in ASEAN-centric regional frameworks like ASEAN-India, East Asia Summit, and ASEAN Regional Forum. He also participated in the 2nd India-Australia-Indonesia trilateral meeting and will attend the Mekong Ganga Cooperation Mechanism and BIMSTEC Foreign Ministers' Retreat, showcasing India's commitment to regional connectivity and cooperation.

14 June 2023 – (Economic Times) Foreign banks in India: Mission Impossible.[11]

[1] https://www.businesstoday.in/latest/economy/story/goldman-sachs-predicts-india-will-overtake-us-to-become-worlds-second-biggest-economy-by-2075-389077-2023-07-10

[2] https://economictimes.indiatimes.com/news/economy/policy/gst-council-meet-28-gst-to-be-levied-on-online-gaming-horse-racing-casinos/articleshow/101672546.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[3] https://economictimes.indiatimes.com/epaper/delhicapital/2023/jul/12/et-mkts/cbdc-aims-to-make-cross-border-transactions-cheaper/articleshow/101678807.cms?utm_source=newsletter&utm_medium=email&utm_campaign=ETepaper_paid&utm_content=smart-investing&ncode=4804a3645515abe5b193fbdf4dca2803ebffa8e180e42be7ddc84a038cf486ea4d130ee9befc1996f8b131e1763ffeac7e06d2d735dfbe14a2f59e73ee86960ec69d059bb6894e7907ea6fa941d10f6a

[4] https://www.bizzbuzz.news/markets/india-thailand-trade-set-to-be-20-bn-in-fy24-1232463

[5] https://economictimes.indiatimes.com/opinion/et-commentary/foreign-banks-in-india-mission-impossible/articleshow/101747333.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[6] https://economictimes.indiatimes.com/news/economy/foreign-trade/commerce-ministry-to-seek-cabinet-nod-for-indo-pacific-supply-chain-agreement/articleshow/101737182.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[7] https://www.captiveinsurancetimes.com/captiveinsurancenews/industryarticle.php?article_id=8545&navigationaction=industrynews&newssection=industry

[8] https://www.drishtiias.com/state-pcs-current-affairs/pm-lays-foundation-stone-and-dedicates-development-projects-in-bikaner

[9] https://economictimes.indiatimes.com/news/economy/policy/one-factor-that-can-put-india-ahead-of-the-us-as-the-2nd-biggest-economy/articleshow/101668658.cms

[10] https://www.outlookindia.com/international/eam-jaishankar-holds-talks-with-counterparts-from-indonesia-malaysia-australia-laos-and-vietnam-news-302411

[11] https://economictimes.indiatimes.com/opinion/et-commentary/foreign-banks-in-india-mission-impossible/articleshow/101747333.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst