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Bangladesh Faces Financial Disaster: Political Chaos May Trigger Banking Meltdown!

February 27, 2025, 8:35 am

Bangladesh’s banking sector is facing a severe crisis as non-performing loans (NPLs) surged to Tk 345,764 crore by December 2023, representing 20.20% of all loans—a dramatic increase from Tk 284,000 crore just three months ago. Bangladesh Bank Governor Ahsan H Mansur revealed these alarming figures at a press conference, highlighting deep-rooted issues in the nation’s financial system.

New Measures to Tackle the Crisis

In response to the mounting crisis, Bangladesh Bank has drafted a Bank Resolution Ordinance, currently open for public consultation on the finance ministry’s Financial Institutions Division website. The proposed ordinance introduces the concept of “bridge banks”—temporary institutions designed to take over weak banks until a suitable buyer is found. It also empowers the central bank to transfer shares, assets, and liabilities to third parties without requiring shareholder consent, and establishes a Bank Restructuring and Resolution Fund supported by government contributions, international financial institutions, and risk-based bank levies.

A key focus of the ordinance is depositor protection. The framework aims to curb insider transactions, prevent unauthorized loan write-offs for influential borrowers, and stop the artificial inflation of bank profits. Additionally, it grants Bangladesh Bank the authority to restrict the transfer or sale of shares by troubled bank owners to help stabilize the sector.

Governor’s Candid Critique Sparks Debate

Governor Mansur’s forthright comments have stirred intense debate among financial stakeholders. While his efforts to expose financial irregularities and enforce stricter discipline have been lauded by some, others fear his transparency could further undermine public confidence. Last September, his warning that 10 commercial banks were on the verge of bankruptcy triggered panic and mass withdrawals. Critics argue that such frank assessments may exacerbate instability rather than resolve it.

Political Instability Compounds Economic Concerns

The banking crisis unfolds amid a broader leadership turmoil in Bangladesh. After an elected leader was ousted amid student agitation in August last year, Nobel Laureate Muhammad Yunus was appointed chief adviser with the task of overseeing parliamentary elections. However, the Yunus government lacks widespread popular support, and political instability is now causing stress within the armed forces, with the army chief reportedly expressing deep frustration over ongoing turmoil.

A Call for Comprehensive Reform

With years of financial scandals, mismanagement, and weak regulatory oversight plaguing the sector, reform is urgently needed. Policymakers are under pressure to implement robust measures that protect depositors, enforce accountability, and rebuild trust in the banking system. However, experts warn that if not executed carefully, these reforms could further destabilize an already fragile economy.

As Bangladesh grapples with these intersecting crises in banking and leadership, the coming months will be critical in determining whether decisive reforms can restore confidence and secure the nation’s economic future.

Reserve Bank of India Discusses Economic Situation and Appreciates Outgoing Governor’s Service

December 20, 2024, 4:45 pm

The 612th meeting of the Central Board of Directors of the Reserve Bank of India (RBI) took place in Guwahati on Friday, chaired by the newly appointed RBI Governor Sanjay Malhotra. During the meeting, the Board expressed its appreciation for the valuable services rendered by Shaktikanta Das, who served as the Governor for six years until his term ended on December 10.

Shaktikanta Das, a seasoned bureaucrat, led the central bank through significant challenges, particularly during the COVID-19 pandemic. He previously held key positions as Secretary of the Department of Revenue and the Department of Economic Affairs under the Ministry of Finance. Das assumed office as the 25th Governor of the RBI on December 12, 2018, with his term extended in 2021.

In the recent meeting, the Board reviewed the global and domestic economic situation and outlook, discussing the activities of select Central Office Departments as well as the draft Report on Trend and Progress of Banking in India for 2023-24.

The meeting was attended by Deputy Governors Michael Debabrata Patra, M Rajeshwar Rao, T Rabi Sankar, Swaminathan J, and other Directors of the Central Board, including Satish K Marathe, Revathy Iyer, Prof. Sachin Chaturvedi, Venu Srinivasan, and Ravindra H Dholakia. Nagaraju Maddirala, Secretary of the Department of Financial Services, was also present.

Sanjay Malhotra, who previously served as the revenue secretary at the Ministry of Finance, was appointed as the new Governor of the Reserve Bank of India, effective December 11, 2024, for a term of three years. Malhotra is an Indian Administrative Service Officer of the 1990 Batch from the Rajasthan Cadre, holding an Engineering degree in Computer Science from the Indian Institute of Technology, Kanpur, and a Master’s in Public Policy from Princeton University, USA.

Moody’s Projects 7.2% Growth for India in 2024, Calls Economy a ‘Sweet Spot’

November 16, 2024, 12:13 pm

The Indian economy is positioned in a “sweet spot” with a combination of robust growth and moderating inflation, according to Moody’s Ratings. The agency has projected a 7.2% GDP growth for the 2024 calendar year, followed by 6.6% in 2025 and 6.5% in 2026.

In its Global Macro Outlook 2025-26, Moody’s highlighted that the global economy has demonstrated resilience, overcoming challenges like supply chain disruptions during the pandemic, inflationary pressures, and the fallout from the Russia-Ukraine conflict. “Most G-20 economies will experience steady growth and continue to benefit from policy easing and supportive commodity prices,” the report noted.

Consumption, Investments, and Manufacturing

For India, the real GDP grew by 6.7% year-over-year in the second quarter (April-June) of 2024. This growth was attributed to a recovery in household consumption, robust investment, and strong manufacturing activity. High-frequency indicators such as expanding manufacturing and services PMIs, rising consumer confidence, and strong credit growth point toward sustained economic momentum in the third quarter.

“Indeed, from a macroeconomic perspective, the Indian economy is in a sweet spot, with the mix of solid growth and moderating inflation,” the agency said.

The festive season and a revival in rural demand, supported by an improved agricultural outlook, are expected to fuel household consumption. Rising capacity utilisation, positive business sentiment, and the government’s continued focus on infrastructure development are also likely to drive private investment.

Inflation Challenges and RBI’s Policy Stance

Despite the optimistic growth outlook, inflation remains a concern. In October, headline inflation breached the Reserve Bank of India’s (RBI) 4% (+/-2%) tolerance range for the first time in over a year, reaching 6.2% due to a spike in vegetable prices. “Despite the near-term uptick, inflation should moderate toward the RBI’s target in the coming months as food prices ease amid higher sowing and adequate food grain buffer stocks,” Moody’s stated.

However, geopolitical tensions and extreme weather events pose risks to the inflation trajectory. While the RBI has maintained its repo rate at 6.5% and adopted a neutral monetary policy stance, it is expected to retain tight policy settings into next year, balancing healthy growth with inflation risks.

Global Risks

Moody’s also flagged potential risks to global economic stability stemming from policy shifts in the US after its elections. Changes in domestic and international policies could accelerate economic fragmentation worldwide, complicating ongoing stabilisation efforts. “The aggregate and net effects of trade, fiscal, immigration, and regulatory policy changes will expand the range of outcomes for countries and sectors,” it warned.

Strong Fundamentals Bode Well

India’s economic fundamentals remain robust, supported by healthy corporate and bank balance sheets, a stronger external position, and ample foreign exchange reserves. These factors, combined with the government’s infrastructure spending and rising business optimism, are expected to underpin steady growth over the coming years.

While sporadic food price pressures continue to inject volatility, Moody’s maintains that the Indian economy is well-positioned for sustainable growth in the medium term.

‘India’s Growing Economy’: Sitharaman Says US And China Can’t Overlook Economic Might

October 24, 2024, 6:42 am

Union Finance Minister Nirmala Sitharaman emphasized India’s growing global influence, underscoring that with one in every six persons in the world being Indian, the country’s economy and capabilities cannot be overlooked. She made these remarks during a panel discussion on “Bretton Woods Institutions at 80: Priorities for the Next Decade,” organized by the Center for Global Development on the sidelines of the World Bank and IMF Annual Meetings 2024.

India’s Rising Global Role

Sitharaman stressed that no country, including distant nations like the United States or neighboring powers like China, can afford to ignore India. She attributed this to India’s vast population, rapidly growing economy, and the country’s expertise in various sectors. “Today, one in every six people in the world is Indian. You cannot ignore our economy and the way it is growing,” she stated.

HAVE A LOOK AT THE VIRAL POST:

Union Minister for Finance and Corporate Affairs Smt. @nsitharaman participates in a discussion on the ‘Bretton Woods Institutions at 80: Priorities for the Next Decade’, organised by the Center for Global Development @CGDev on the sidelines of the World Bank and IMF… pic.twitter.com/AuaOeSVOw0

— Ministry of Finance (@FinMinIndia) October 23, 2024

Sitharaman pointed to India’s skilled workforce, which plays a pivotal role globally, from running large corporations to managing complex systems. She also highlighted India’s technological leadership, particularly in areas like refining systems and banking, which further cements the country’s indispensable role in global affairs.

Support for Multilateral Institutions

Sitharaman reiterated India’s long-standing support for multilateral institutions like the World Bank and IMF, stressing that India never aimed to undermine these entities. However, she expressed concern about their current relevance, citing the diminishing effectiveness of multilateral institutions in providing solutions.

India, she noted, has always championed strategic and peaceful multilateralism, adding, “We see the hope and the expectations pinned on multilateral institutions fissure away because we think no solutions are coming out of them.”

The Need for Reform and Information Sharing

The Finance Minister called for these institutions to step up, urging them to leverage their wealth of information and expertise to share timely insights with countries. Sitharaman emphasized the need for these organizations to help build strong institutions globally, rather than tearing them down, as part of a strengthened commitment to multilateralism.

Sitharaman also stressed the role of the Bretton Woods institutions in shaping the future, rather than merely reacting to it. “Shaping the future is an ambitious goal, and we need Bretton Woods institutions to work on that, rather than reacting to future developments,” she remarked.

India’s Contributions to Global Initiatives

Highlighting India’s contributions to global efforts, Sitharaman mentioned several initiatives, including the International Solar Alliance, the Biofuel Alliance, and disaster-resilient infrastructure. These initiatives, she noted, require significant funding and international cooperation, especially for smaller and island economies.

India’s digital public infrastructure, which has been publicly funded and shared with other countries, is a prime example of how India is contributing to global development, according to Sitharaman.

In her closing remarks, Sitharaman reiterated India’s commitment to multilateralism and urged the Bretton Woods institutions to strengthen themselves for the global good. She stressed the importance of information sharing and proactive leadership in shaping the future.

Sitharaman’s visit to Washington, DC, was part of her larger trip to the United States, where she was welcomed by India’s Ambassador to the US, Vinay Kwatra, after arriving from New York.

Is the World’s Best-Performing Economy Losing Its Shine?

September 3, 2024, 3:22 am

India, often lauded as the world’s fastest-growing major economy, has recently witnessed a slowdown in its GDP growth. In March 2024, CNN termed India as the world’s fastest-growing major economy. However, India’s GDP growth for the quarter ending June 2024 came in at 6.7%, slightly below expectations and 1.5 percentage points lower than the growth rate during the same quarter last year. This dip has raised eyebrows both domestically and internationally. While some may view this as a troubling sign, it’s crucial to recognize that this is not an indication of long-term decline but rather a momentary pause in India’s otherwise upward trajectory. The current challenges are significant, but they are not insurmountable. A deeper look reveals that India has both the strength and the strategies to bounce back robustly.

Domestic Factors Impacting Growth

Weather Challenges and Agricultural Impact: India’s agricultural sector remains a bedrock of the economy, employing a significant portion of the workforce and supporting rural livelihoods. This year, erratic monsoon patterns and an unusually harsh summer have disrupted this sector. Unpredictable weather has led to a decline in agricultural output to 2.7%, affecting rural incomes and stoking inflation, particularly in food prices. These inflationary pressures, in turn, dampen overall consumer demand, slowing down economic activity. Investments in sustainable agricultural practices and improved irrigation systems could mitigate the adverse effects of such climatic irregularities, stabilizing rural incomes and enhancing overall economic resilience.

Economic Implications of Electoral Cycles: India’s vibrant democracy, while a strength, also poses unique economic challenges, especially in the run-up to elections. Political uncertainty often leads to a wait-and-watch approach among businesses and consumers. Investment decisions are deferred, and households cut back on discretionary spending due to apprehensions about policy continuity. This phenomenon, known as the “election cycle effect,” temporarily suppresses economic activity. Retail sales growth, for example, slowed to 4.2% in recent months, down from 7.1% earlier in the year, reflecting cautious consumer sentiment. Maintaining a steady course of economic reforms irrespective of electoral outcomes is crucial to maintaining economic stability.

Geopolitics & Rate Hikes

Global Economic Slowdown and Export Challenges: The slowdown in global demand has been a significant external factor affecting India’s growth. As the US, China, Russia, and the European Union—India’s major trading partners—grapple with economic challenges, Indian exports, particularly in textiles, automotive, and IT services, have seen a decline. Despite these challenges being a drag, India has continued to maintain a strong export performance in sectors such as pharmaceuticals, which grew by 12% year-on-year, and chemicals, demonstrating resilience. The focus must now be on diversifying export markets and enhancing the competitiveness of Indian products globally. India’s proactive trade policies and new trade agreements are set to open up new avenues, bolstering export growth and reducing dependency on traditional markets.

Geopolitical Instabilities: The geopolitical landscape, marked by conflicts like the Russia-Ukraine, Israel-Middle East and ongoing US-China trade tensions, has created a climate of uncertainty, affecting global supply chains and trade flows. For India, this has meant disruptions in imports and exports and increased volatility in commodity prices. For instance, crude oil imports, which constitute a significant portion of India’s import bill, increased by 14% in the first half of 2024 due to supply chain disruptions. Strengthening trade relations with emerging markets in Africa and Latin America, as well as enhancing economic cooperation with ASEAN countries, could shield India from global economic shocks.

Interest Rates and Their Economic Impact: The Reserve Bank of India (RBI) has been aggressively raising interest rates to curb inflation, with the repo rate now standing at 6.5%. While higher rates help in managing inflation, they also make borrowing costlier, affecting consumer spending and business investment. Credit growth in the non-food sector slowed to 9.2% in July 2024, down from 13.5% a year earlier, reflecting the impact of higher borrowing costs. Balancing inflation control with growth is critical. A more nuanced monetary policy approach that supports growth while keeping inflation in check could be instrumental. The government’s continued focus on structural reforms and fiscal prudence will also play a crucial role in complementing the RBI’s efforts.

Path to Recovery

Job Creation and Skill Development: India’s large and youthful workforce is a double-edged sword. While it presents immense potential for economic growth, it also poses a challenge in terms of job creation. Despite the current slowdown, India has shown resilience in sectors like technology, e-commerce, and renewable energy, which continue to create jobs. Employment in the technology sector, for example, grew by 5.7% in 2024, even amidst global tech layoffs. Initiatives such as ‘Skill India’ and ‘Make in India’ are set to bridge the skills gap and enhance employability. By focusing on high-growth sectors and promoting startups, India can harness its demographic dividend, leading to sustainable economic growth.

Accelerating Structural Reforms: Structural reforms are the cornerstone of sustained economic growth. The government’s commitment to reforming labour laws, land acquisition processes, and the financial sector has already begun to show positive outcomes. The pace of these reforms is vital in enhancing the ease of doing business, attracting foreign investment, and fostering domestic entrepreneurship. Prime Minister Modi’s administration has shown determination in driving these reforms forward, ensuring that India remains an attractive destination for global investors. Accelerating these reforms could unlock India’s growth potential, driving the economy back to a high-growth trajectory.

Sustained Growth

India’s economic fundamentals remain strong. The country continues to be one of the most attractive investment destinations globally, thanks to its large market, growing middle class, and pro-business government policies. The slowdown is temporary, and with strategic interventions, India is well-positioned to regain its growth momentum. Critical areas of focus include:

Promoting Export Competitiveness: Diversifying export markets and improving the quality and competitiveness of Indian goods will reduce dependency on traditional markets and drive export-led growth.

Enhancing Infrastructure Investment: Continued investment in infrastructure, particularly in logistics, transportation, and digital infrastructure, will reduce costs, enhance productivity, and attract investments.

Innovation and digitalisation: Encouraging innovation and leveraging digital technologies across sectors can boost productivity, create jobs, and sustain growth.

The Bottom Line is that India’s GDP growth slip, while a cause for concern, is not a reflection of the country’s long-term economic potential. The proactive and visionary Indian leadership has laid a solid foundation for sustained growth. By addressing both domestic and global challenges with strategic policy measures and reforms, India is poised not only to recover from this slowdown but to emerge stronger, reaffirming its position as one of the world’s leading economies. With the right mix of policies and reforms, India can convert this temporary setback into an opportunity for renewed growth and prosperity.

Rakesh K Chitkara is an expert in public policy, regulations, and international trade.

RBI Keeps Repo Rate Unchanged at 6.5% for Ninth Consecutive Time Amid Declining Inflation

August 8, 2024, 1:17 pm

The Reserve Bank of India (RBI) has maintained the repo rate at 6.5% for the ninth consecutive time, as announced by Governor Shaktikanta Das during the Monetary Policy briefing on Thursday.

This marks 18 months of unchanged rates, with the central bank continuing its stance on the withdrawal of accommodation. The growth projection for the current financial year remains steady at 7.2%.

Governor Das raised concerns about the increasing disbursal of top-up home loans and urged lenders to take corrective measures, warning that a decline in deposits could lead to structural liquidity issues for banks.

Inflation is on a declining trajectory, Das noted, with a significant base effect expected to lower overall inflation in the third quarter. However, high food inflation in the first quarter of FY25 is slowing the disinflation process and affecting household inflation expectations. Household consumption is currently supporting a demand turnaround.

Das projected retail inflation at 4.5% for the current fiscal year, assuming a normal monsoon, and expressed optimism that improved agricultural activities would enhance rural consumption. The manufacturing sector is gaining strength due to increasing domestic demand, while the service sector remains buoyant.

The governor also noted that the rupee remained largely range-bound in August and emphasized that the country’s financial system is resilient, bolstered by broader macroeconomic stability.

Economic Survey 2024: Economy Must Curate 78.5 Lakh Jobs Every Year

July 22, 2024, 1:14 pm

Finance Minister Nirmala Sitharaman presented the Economic Survey in Parliament today, July 22, 2024, ahead of her seventh consecutive Union Budget presentation scheduled for tomorrow.

According to the Economic Survey, the Indian economy must create an average of nearly 78.5 lakh jobs per year in the non-farm sector until 2030 to accommodate the growing workforce.

Prepared by the Economic Division of the Department of Economic Affairs in the Ministry of Finance and supervised by the chief economic adviser, the Economic Survey is divided into two sections. The first part addresses the country’s economic developments and challenges, providing a comprehensive review of the economy. The second part focuses on the financial year that has just concluded.

Finance Minister Nirmala Sitharaman will present the Budget on July 23, marking the inaugural full budget of the Modi 3.0 government’s tenure.

Economy beats estimates, grows 8.2% in FY24

June 1, 2024, 3:06 am

Growth propels economy to $3.5 trillion and set the stage for achieving the $5-trillion target in the next few years.

Amidst deepening geopolitical distress and global macroeconomic headwinds, India’s GDP is estimated to have posted a growth of 8.2 per cent in financial year 2023-24 compared to the growth rate of 7.0 per cent in FY 2022-23.

The gross value addition (GVA) has grown by 7.2 per cent in 2023-24 over the growth rate of 6.7 per cent in 2022-23, as per the data released by the National Statistical Office (NSO) of the Ministry of Statistics and Programme Implementation (MoSPI).

The Government’s fiscal deficit for FY24 stands at Rs 16,53,670, coming in 4.6 per cent less than in FY23 and 4.7 per cent lower than FY24 revised estimates.

The GVA expansion is attributed to significant growth of 9.9 per cent in the manufacturing sector in 2023-24 over -2.2 per cent in 2022-23 and growth of 7.1 per cent in 2023-24 over 1.9 per cent in 2022-23 for the mining & quarrying sector.

Finance Minister Nirmala Sitharaman said the GDP data “showcases robust economic growth and this growth rate is the highest among the major economies of the world”. Sitharaman highlighted on X that the manufacturing sector highlights the success of the Modi Government’s efforts for the sector. “Many high-frequency indicators indicate that the Indian economy continues to remain resilient and buoyant despite global challenges. India’s growth momentum will continue in the third term of PM Narendra Modi,” Sitharaman said.

The GDP growth of 8.2 per cent for 2023-24 and 7.8 per cent in the last quarter of the fiscal has beaten even optimistic expectations, notes ASSOCHAM Secretary General Deepak Sood who attributed it to the stellar performance of manufacturing, which is expected to sustain momentum in the current financial year as well. “Manufacturing has really bounced back and this is great news for India which is positioned amongst the fastest-growing economies of the world,” says Sood.

According to the NSO data, nominal GDP has witnessed a growth rate of 9.6 per cent in FY 2023-24 over the growth rate of 14.2 per cent in FY 2022-23. “The growth momentum has surprised everyone,” agree Sunil Kumar Sinha, Principal Economist and Paras Jasrai, Senior Analyst at India Ratings. Although the nominal GDP growth in FY24 is now lower than that used in the FY25 budget preparation, the sheer growth momentum is likely to lead to a higher nominal GDP in FY25. This along with an all-time high RBI dividend will help the Government in realizing higher receipts. The noteworthy feature is the continued capex push by the government. The capex grew 26.5 per cent to Rs 992.4 billion in April 2024, indicating the sustained support to the investment demand in the economy,” say Sinha and Jasrai.

The quarterly estimates of GDP for the fourth quarter (January-March) of 2023-24 show GDP growth of 6.3 per cent and GVA growth of 7.8 per cent in Q4 of FY 2023-24. At the nominal level, growth rates in GVA and GDP for Q4 of FY 2023-24 have been estimated at 8.0 per cent and 9.9 per cent respectively.

India’s GDP (constant prices) is estimated to attain a level of Rs 173.82 lakh crore in the year 2023-24, against the first revised estimates (FRE) of GDP for the year 2022-23 of Rs 160.71 lakh crore.

Nominal GDP or GDP at current prices is estimated at a level of Rs 295.36 lakh crore in the year 2023-24, against Rs 269.50 lakh crore in 2022-23.

“Indians Make 10-12 Billion Cashless Payments”: S Jaishankar on Digital Infrastructure

May 6, 2024, 1:05 am

Highlighting the advancement of cashless transactions in India, External Affairs Minister S Jaishankar emphasised that numerous countries engage in discussions with India regarding its digital infrastructure, which has now become a defining feature of the nation on the global stage.

Jaishankar noted that India witnesses approximately 10-12 billion cashless transactions monthly, a significant leap forward compared to other nations such as the United States, which conducts only 4 billion cashless transactions annually.

Addressing a public gathering in Sambalpur, Jaishankar underlined the transformation brought about by digital technology, particularly in mobile-based payments, which have seamlessly integrated into the daily lives of Indians.

He further asserted that India has ascended to become one of the top five global economies, a remarkable turnaround from concerns over its economic trajectory a decade ago.

According to Jaishankar, India’s robust structural framework positions it to play a pivotal role in driving global economic progress, a sentiment echoed by projections from the International Monetary Fund, which foresees India’s significant contribution to global growth over the next two decades.

Furthermore, Jaishankar highlighted India’s exceptional economic resilience in the aftermath of the COVID-19 pandemic, standing out as the only major economy to achieve a 7 per cent growth rate amid widespread economic downturns across the world.

Pakistan Requires Further IMF Bailout for Economic Stability, Shehbaz Sharif said

March 22, 2024, 5:12 am

Pakistan Prime Minister Shehbaz Sharif stated that the financially troubled nation requires another extended bailout from the International Monetary Fund (IMF) to stabilize its vulnerable economy on Thursday, as per ARY News.

“A new tranche of loan is likely to be received from the IMF in a few days, however, we would need another programme,” he said while addressing the session of the Special Investment Facilitation Council (SIFC) apex committee attended by civil-military leadership.

The remarks were made a day following the International Monetary Fund (IMF) reaching a staff-level agreement with Islamabad. This agreement, upon approval by its board, would release the final installment of USD 1.1 billion under the current USD 3 billion standby arrangement.

He mentioned that the International Monetary Fund (IMF) completed the review for the disbursement of the final tranche of USD 1.1 billion, anticipated to be received by next month.

“We will succeed gradually in breaking the begging bowl and coming out of the debt trap with the reforms,” PM Sharif said.

He also appealed to all political parties and provincial governments to support the successful implementation of the agenda for macroeconomic stability in the country, as per ARY News.

“We all have to work together. With the support of all the provinces, we will together resolve all the challenges and difficulties faced by the country”, he further added.

Significantly, during the five-day visit of the IMF mission to Islamabad for the final review of the stand-by program, it was noted that Pakistani authorities had shown interest in seeking another bailout. The stand-by arrangement is set to expire on April 11.

Before the stand-by arrangement, Pakistan had to fulfill IMF conditions, as per ARY News, which included revising its budget, increasing interest rates, and generating revenue through additional taxes, as well as raising electricity and gas prices.

The IMF confirmed Pakistan’s pursuit of a 24th medium-term bailout package to establish enduring structural reforms, according to Dawn.

The IMF announced the staff-level agreement on the successful completion of the existing short-term facility, confirming this development.

In its end-of-mission statement, the IMF stated that, pending approval from its executive board, the staff-level agreement would allow Pakistan to access approximately USD 1.1 billion, equivalent to 828 million special drawing rights (SDR), by late April.

PM Shehbaz Sharif Highlights Pakistan’s Economic Crunch

March 3, 2024, 4:28 pm

Shehbaz Sharif, Pakistan’s newly elected prime minister, brought attention to the nation’s dire economic situation on Sunday, claiming that even the National Assembly’s expenses were being covered by borrowed funds, as Dawn reported.

Shehbaz Sharif, the leader of the Pakistan Muslim League-Nawaz (PML-N), bemoaned the dire debt situation the nation is currently experiencing.

“But if we decide to do a deep surgery and bring changes in the system, basic reform…and I have no doubt that Muhammad Nawaz Sharif, Asif Ali Zardari, and others will agree that we can either get rid of a life of debt or we move forward with heads down in shame,” he said.

“No this will not happen, we will rise and we will make Pakistan self-sufficient,” he added.

In addressing the nation’s financial crisis, the PML-N leader pointed out that of the Rs 12,300 billion in Pakistani Rupees (PKR) that the nation generates, Rs 7,300 billion are awarded to the provinces under the National Finance Commission’s award, and the government is facing a staggering Rs 7000 billion deficit as a result of service charges that can total up to Rs 8,000 billion.

“Where will the money come for development, health, and education sectors? From where will the armed forces’ government employees’ salaries be paid?”

In response, he said that Pakistan’s largest problem is that all of its expenses are covered only by loans.

“All this is being afforded via loans throughout the years…This is the biggest challenge faced by the country today,” he said.

“All of our salaries are being paid via taxes. Does such a situation warrant such hooliganism?” he added.

He went on to declare that the May 9 rioters would not be pardoned and to take legal action against everyone connected to the bloodshed.

In an assembly that began with members of the Sunni Ittehad Council (SIC) raising shouts, the Pakistan National Assembly elected PML-N leader Shehbaz Sharif as the nation’s 24th prime minister on Sunday.

Speaker of the Pakistan National Assembly Sardar Ayaz Sadiq said that Shehbaz Sharif had won 201 votes to become prime minister. Omar Ayub Khan, the leader of the Sunni Ittehad Council (SIC) and leader of the Pakistan Tehreek-e-Insaf (PTI), obtained 92 votes.
He announced protests by the SIC lawmakers, the report said.

Fuel-starved Sri Lanka enters deal with Chinese company : Official in Colombo

May 23, 2023, 1:28 am

Cash-strapped Sri Lanka has signed a long-term agreement with Chinese oil and gas giant Sinopec on important storage, distribution and sale of petroleum products in the island nation, President Ranil Wickremesinghe’s office said on Monday. The deal with Sinopec– a state-owned Chinese company –was reached months after the two sides commenced their negotiations and Sri Lanka approved a proposal in March to liberalise the fuel retail marketing in the country with more players from China, Australia and the US.
The island nation’s fuel retail market was a state monopoly under the Ceylon Petroleum Corporation (CPC) till 2003 when the Indian Oil Company (IOC) was allowed to operate. “Negotiations have been completed with Sinopec Fuel Oil Lanka Ltd and its parent company in China and Singapore for a long-term contract on important storage, distribution and sale of petroleum products in the island nation,” the statement issued by the president’s office said. The Cabinet had granted nod to award licenses to Sinopec, United Petroleum Australia and RM Parks of USA in collaboration with Shell Plc to enter the fuel retail market in Sri Lanka.
However, as of now, the deal has been reached with China’s Sinopec only.The energy and procurement committees had approved a recommendation to award the three companies the licenses to operate. They will be allocated 150 dealer-operated fuel stations currently run by the CPC, a state fuel entity.
The parties will be granted a license to operate for 20 years to import, store, distribute and sell petroleum products in Sri Lanka. Debt-ridden Sri Lanka is still struggling to normalise its crisis-hit economy.
According to official figures, Sri Lanka’s total debt is USD 83.6 billion, of which foreign debt amounts to USD 42.6 billion and domestic debt amounts to USD 42 billion.In April 2022, Sri Lanka declared its first-ever debt default, the worst economic crisis since its independence from Britain in 1948, triggered by forex shortages that sparked public protests. The country also faced long queues for fuel which is still being rationed.Months-long street protests led to the ouster of the then-president Gotabaya Rajapaksa in mid-July. Rajapaksa had started the IMF negotiations after refusing to tap the global lender for support.

Bangladesh’s GDP growth to overtake China, IMF report forecasts

May 8, 2023, 5:17 pm

Bangladesh’s Gross Domestic Product (GDP) growth rate in the current fiscal year will overtake China, the International Monetary Fund’s latest report on the Asia-Pacific region forecast, according to Daily Sun citing United News of Bangladesh.

According to the latest report from the IMF, Bangladesh will be in the second position, after Vietnam, in terms of GDP growth rate in the current fiscal year. IMF’s Regional Economic Outlook for Asia and Pacific May 2023 report also predicted that Bangladesh may surpass China in terms of growth in 2024.

In Bangladesh, the GDP growth rate will slow to 5.5 per cent in 2023 because of demand-management measures, which is still higher than China’s projected growth rate of 5.2 per cent, reported Daily Sun.

However, the economy of China is much bigger than that of Bangladesh.
The IMF report suggests that the recently approved Extended Fund Facility for Bangladesh will help address economic challenges caused by Russia’s war in Ukraine, and the Resilience and Sustainability Facility arrangement will expand fiscal space to finance climate investment priorities and build resilience against long-term climate risks.

The report highlights the importance of international cooperation, particularly in securing financial assistance for climate change adaptation in vulnerable emerging markets in the region, including Bangladesh and the Pacific Islands, Daily Sun reported.
Despite the rapid economic development in Bangladesh, IMF official raised concerns about some of the country’s macroeconomic indicators.

India and China will account for half of global growth in 2023, says IMF

April 7, 2023, 2:14 pm

According to the International Monetary Fund (IMF), the global economy will grow by less than 3% in 2023, with India and China accounting for half of global growth that year.

Global growth will remain around 3% over the next five years, the lowest medium-term growth forecast since 1990 and well below the previous two-decade average of 3.8%. Asia, as per the report.

“Some momentum comes from emerging economies–Asia especially is a bright spot. India and China are expected to account for half of the global growth in 2023,” IMF chief Kristalina Georgieva said on Thursday (local time).The economic slowdown has continued this year as several economists and agencies earlier forecast degrowth in various advanced economies.

“Despite surprisingly resilient labour markets and consumer spending in most advanced economies, and the uplift from China’s reopening, we expect the world economy to grow less than 3 per cent in 2023,” the IMF chief said.IMF will next week release its World Economic Outlook.She further said economic activity is slowing in the US and the Eurozone because of the current higher interest rates regime, thereby weighing on the demand.

“About 90 per cent of advanced economies are projected to see a decline in their growth rate this year,” she predicted.
“For low-income countries, higher borrowing costs come at a time of weakening demand for their exports. And we see their per-capita income growth staying below that of emerging economies. That is a severe blow, making it even harder for low-income nations to catch up.”

Against that backdrop, she stressed upon three priorities to brighten global growth prospects. They are to fight against inflation and safeguard financial stability; improve medium-term growth prospects, and reduce global disparities.

Decline in India’s wholesale inflation continues in Feb, says Official data

March 14, 2023, 1:23 pm

Wholesale inflation in India based on the Wholesale Price Index continued to moderate and was at 3.85 per cent (provisional) in February 2023, against the previous month’s 4.73 per cent, official data showed on Tuesday.

Overall wholesale inflation was at 8.39 in October and has been falling since then. Notably, the wholesale price index (WPI)-based inflation had been in double digits for 18 months in a row till September. Meanwhile, retail inflation in India fell marginally but remained above RBI’s 6 per cent upper tolerance band for the second straight month in February 2023, with the Consumer Price Index pegged at 6.44 per cent, government data showed Monday.

Further, Consumer Food Price Index in February was 5.95 per cent, data showed. Retail inflation for vegetables, however, declined 11.61 per cent, but in January retail inflation was 6.52 per cent.

India’s retail inflation was above RBI’s 6 per cent target for three consecutive quarters and had managed to fall back to the RBI’s comfort zone only in November 2022.
Under the flexible inflation targeting framework, the RBI is deemed to have failed in managing price rises if the CPI-based inflation is outside the 2-6 per cent range for three quarters in a row.

Since May last year, the RBI has increased the short-term lending rate by 250 basis points, including the latest 25 bps hike, to tame inflation. Raising repo rate helps in cooling demand in the economy and thus helps in managing inflation.
Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.

India ultimate destination for business , G20 calls for friendshoring : Sitharaman

March 5, 2023, 10:28 am

India is the destination for businesses, Finance Minister Nirmala Sitharaman on Saturday said that the country has the right combination of factors that matter for a growing economy including a middle class, captive market with purchasing power, technology-driven public investment and products, digital infrastructure and rule of law.
In her remarks during an interaction at the Raisina Dialogue here, Sitharman also said that there is no sector in India that is not available for the private sector and rejected opposition criticism that government is on a selling spree of public assets. “There is no sector in India that is not available for the private sector to be in function. Public sector policy is not a crazy one and the government is not selling out everything. Opposition fully understands the meaning but says we are selling them off. We are not selling them off,” she said.
She said India is putting across voice of the Global South at G20.
Sithraman said that well-trained youth, middle class giving a captive market, technology-driven investment and public infrastructure were among reasons for India’s sustained growth.
“There are several ministers who are part of the G20 who have been speaking of friendshoring. India, today, is the destination for businesses. We have the right combination of things that matter for a growing economy–a middle class, captive market with purchasing power, tech-driven public investment and products. Digital infrastructure exists,” she said.
Friendshoring refers to relocating supply chains to countries with low risk of disruption from political factors or those considered political and economic allies.
US Treasury Secretary Janet Yellen had said during her visit to India last month that Washington is advancing an approach called “friendshoring” to boost resilience of its supply chains by strengthening integration with trusted trading partners including India.
Sitharaman also said the way the government responded to COVID-19 pandemic and the necessity of sustaining growth have worked out really well.

Budget 2023: Squad responsible for preparing the budget

February 1, 2023, 1:54 pm

The Union Budget 2023 has been presented by Finance Minister Nirmala Sitharaman. Though the union minister is the face of the budget, yet it requires a significant amount of team work in preparing budget as it impacts every sector and individual of the country at a large scale. Here is a look at the core members responsible for carrying out the budget:

Finance Minister Nirmala Sitharaman

The finances of the government have traditionally been controlled by the Ministry of Finance. The Second woman Finance Minister after Indira Gandhi, Sitharaman took charge as Finance Minister in 2019 when the country was already slowing down. The uncertainties during her tenure have been much worse than than her predecessors P Chidambaram and Pranab Mukherjee, which made her job more difficult.

T V Somanathan

T V Somanathan is the finance secretary in the government, the senior-most officer in the finance ministry. He is also in charge of the finance ministry’s expenditure department. Before taking charge finance secretary, he was an additional secretary and joint secretary in the Prime Minister’s Office.

Ajay Seth

Ajay Seth is the secretary of the finance ministry’s economic affairs department designated with a core position in deciding budget as Ajay Seth is the secretary of the finance ministry’s economic affairs department.

Tuhin Kanta Pandey

Tuhin Kanta Pandey is the secretary of the finance ministry’s DIPAM (Department of Investment and Public Asset Management). He is a 1987-batch IAS officer from Odisha cardre. He was responsible for Major disinvestments like LIC and Air India.

Sanjay Malhotra

Sanjay Malhotra in December 2022 took charge as the finance ministry’s revenue secretary. He is a 1990-batch IAS officer of the Rajasthan cadre. Malhotra was working as an officer on special duty in the revenue department since October 2022.

Vivek Joshi

Vivek Joshi is the secretary of the finance ministry’s Department of Financial Services (DFS). The department is responsible for functioning of banks, financial institutions, insurance companies and NPS. A 1989-batch IAS officer of Haryana cadre, Joshi was earlier the Registrar General and Census Commissioner under the Ministry of Home Affairs.

V Anantha Nageswaran

V Anantha Nageswaran is the chief economic advisor of the government. Nageswaran spearheaded the drafting of the Economic Survey for 2022-23. Nageswaran has served as a part-time member of the Prime Minister’s Economic Advisory Council from 2019 to 2021.

Nationwide strikes in France to stall Macron’s retirement reform

January 19, 2023, 2:24 pm

The French government is about to bring its new bill to officially increase the retirement age from 62 to 64. This move is expected to receive big push back from the unions as they plan a massive nationwide strike on Thursday.

Intercity, commuter train services, many schools and other public services are expected to be shut down due to strikes. Paris metro will operate only two driverless lines. Tens of thousands of protesters are expected to take part in protests in Paris. The police will also be deployed in large numbers to avoid any violence by ultra-left “black bloc” infiltrators.

President Emanuel Macron is going to face a pivotal moment in his second term as he tries to push through this reform. If forced to take rollback on the bill it would mark the end of any serious reforms in his second term. Steamrolling the reform is a hard option as its outcome would be rolling strikes in all the sectors effectively bringing the country to a standstill.

The attempt to bring this reform is not new. President Macron made an earlier more ambitious attempt in 2019 to execute the reform but had to step back due to the Covid-19 pandemic. The opposition argues there are cost-saving alternatives to making people work longer, such as cutting pensions. The concern over the reform is that it will hit the poor the hardest.

Every subsequent attempt to bring retirement reform since 1982 has been met with fierce public opposition, yet in most cases, the reform was ultimately successful. For instance, despite weeks of demonstrations, Nicolas Sarkozy increased the retirement age to 62 in 2010.

Elisabeth Borne, French PM has pledged simpler options to retire early for those in hazardous or physically demanding occupations, initiatives to attract older people back into the workforce, and a greater guaranteed minimum pension to mitigate the consequences of the change.

China’s economy grows by mere 3% amid shrinking population

January 17, 2023, 1:12 pm

Chinese Economy had its weakest performance in 2022 since 1976 the final year of Mao Zedong’s three-decade rule. China’s Economy grew by 3% in 2022, according to government data. This comes when China’s population has shrunk for the first time in 60 years as a start of a period which is expected to be a period of population decline.

The world’s most populous nation has seen birth rates plummeting down to record lows as its workforce ages. This is having an adverse impact on nation’s economy and adding pressure to its already strained public finances.

According to a study released on Tuesday by Beijing’s National Bureau of Statistics (NBS), the population of mainland China was roughly 1,411,750,000 at the end of 2022, down 850,000 from the end of the previous year. The NBS reported that there were 9.56 million births while there were 10.41 million deaths. In China, males still outweigh women by a ratio of 722.06 million to 689.69 million.

Prior to removing the aim from official announcements due to the deteriorating economic Conditions, China’s government had set a target of 5.5 percent growth. Even still, the increase in the fourth quarter was far higher than some experts had anticipated.

“The data exceeded expectations over the board, which means fewer risks to Q1-23 growth. We have revised our growth forecast for 2023 to 6.0 percent,” Carlos Casanova, senior economist for Asia at UBP in Hong Kong, told news agency.

“Namely, China experienced a permanent loss in potential output as a result of low fertility rates during three long years of zero-COVID, resulting in a marked population decline.”

The NBS reported that there were 9.56 million births while there were 10.41 million deaths in 2. In China, male population still outnumbers women population i.e. 722.06 million males to 689.69 million women.

The latest estimates represent the country’s first population decline since 1961, when the Great Leap Forward, Mao Zedong’s catastrophic agricultural strategy, led to the greatest famine in modern history.

21st century is India’s, we can be USD 40 trillion economy by 2047: Mukesh Ambani

December 29, 2022, 1:38 pm

Mukesh Ambani, Chairman and Managing Director of Reliance Industries on Wednesday said that the world sees 21st century as India’s and we can become USD 40 trillion economy by 2047.
He was speaking on the occasion of the Reliance Family Day Function. “Years will roll. Decades will pass. Reliance will continue to grow bigger and bigger like the proverbial banyan tree. Its branches will spread wider, its roots will go deeper and it will touch the lives of an ever-increasing number of Indians, enriching them, empowering them, nourishing them, and caring for them,” said the Chairman.
“But we will forever remember with gratitude our founder who planted the seed of this Vata Vruksh forty-five years ago. In Hindu tradition, Vata Vruksh is noble, it is sacred. Whenever I think of Reliance and the mission for which my father founded it, I believe that there is, similarly, something noble and sacred about that mission,” he added.
Mukesh Ambani claimed that Reliance’s mission is to make India prosperous by developing world-class businesses and to bring happiness in the lives of all Indians. “As you know, we are living through a time when the world is beginning to see the 21st Century as ‘India’s Century’. Our Prime Minister Narendra Modi ji, has aptly described it as India’s Amrut Kaal. The next 25 years are going to be the most transformational in the 5000-year-old history of India. This is when India is poised to achieve exponential economic growth. We can become a USD 40 trillion economy by 2047 – the Centenary of our Independence — in a sustainable and stable manner,” he said.
He termed the young demography and new technology acquired by India as a blessing and said that this mission is realistic and achievable. “From an era of shortages, scarcity and widespread poverty, India will enter an era of inclusive prosperity, an abundance of opportunities, and unimaginable improvement in the ease of living and quality of life of 1.4 billion Indians. Similarly, at a time when uncertainty, volatility and even regression can be seen in many parts of the world, India is being regarded globally as a Shining Spot. Therefore, I would like every leader and every employee in Reliance to know that destiny has given us an opportunity — and also a responsibility — to make a pivotal contribution to the realisation of the enormous promise of India’s Amrut Kaal,” Mukesh Ambani said.

‘India is today 5th largest economy in the world’, says PM Modi

October 22, 2022, 2:41 pm

Prime Minister Narendra Modi highlighted the reforms undertaken by the Centre for the development of the country on Saturday and said India is trying to save itself from the global crisis and economic slowdown.

Earlier in the day Prime Minister Modi launched the ‘Rojgar Mela’, a recruitment drive for 10 lakh personnel virtually.

While addressing the event PM Modi said, “For fulfillment of the resolve of a developed India, we are marching ahead on the path of self-reliant India. The efficiency of government departments has increased due to the efforts of our Karmayogis. 7-8 years of hard work is behind it.”

Meanwhile, in the last eight years, India has steered and become the fifth-largest economy in the world.

“India is today 5th largest economy in the world. In the last eight years, we have jumped to the 5th position from the 10th position. It is true that many big economies of the world are struggling with inflation and unemployment…The side effects of the biggest crisis in 100 years cannot just go away in 100 days,” PM said.

“Despite this, India, with full force, new initiatives, and some risks, has been trying to save itself from the global crisis. We have been able to save ourselves till now with your cooperation. We have, in the last eight years, minimized the issues which created obstacles in our economy,” PM Modi added.

India is scaling new heights with ‘Make In India’ and ‘Aatmanirbhar Bharat’ Abhiyan which increased the number of exports.

PM Modi further stated that by 2014 there were few startups but today there are around 80,000 startups in the country.

“India’s youth is our biggest strength. The focus is on skilling India’s youth for a brighter future. StartUp India has given wings to the aspirations of our country’s youth,” PM said.

Talking about Khadi and Village industries PM Modi said, “In these years, more than one crore jobs have been created in Khadi and Village Industries.”

Moreover, fulfilling the continuous commitment of the Prime Minister to providing job opportunities for the youth is a significant step and 75,000 newly inducted appointees’ appointment letters are handed over.

The statement stated, “As per the directions of the Prime Minister, all Ministries and Departments are working towards filling up existing vacancies against sanctioned posts in Mission Mode.”

Across the country, recruits will join 38 Ministries/Departments of the Government of India.

“The appointees will join the government at various levels viz. Group – A, Group – B (Gazetted), Group – B (Non-Gazetted), and Group – C. The posts on which appointments are being made include Central Armed Force Personnel, Sub Inspector, Constable, LDC, Steno, PA, Income Tax Inspectors, MTS, among others,” the PMO statement said.

Ministries and Departments or through recruiting agencies such as UPSC, SSC, and Railway Recruitment Board the recruitments are being done.

However, the statement concluded, “For expeditious recruitment, selection processes have been simplified and made tech-enabled.”

China’s high-paced growth seems to have ended amid cooling economy: Survey

September 21, 2022, 12:52 am

The high-paced growth era seems to have come to an end in China amid the constant crunch of Bejing’s economy, as almost 60 per cent of European businesses stated that they were cutting revenue projections for 2022, which does not bode well for Bejing’s attractiveness to overseas firms, according to a survey.
China’s economy is cooling partly due to new constraints and partly change in development strategy. The coronavirus pandemic, the war between Ukraine and Russia and trade disputes with developed nations including the United States have imposed severe limitations to Bejing’s growth journey, according to the Financial Post.
According to a survey by Oxford Economics, which was cited by the Financial Post, China’s gross domestic product (GDP) will grow an average 4.5 per cent over this decade.
The COVID-19-led lockdown in China’s economic hub Shanghai has reportedly paralyzed the world’s second-largest economy and hit global supply chains and it will force the Chinese economy to take longer time than other Asian economies such as South Korea and Taiwan to catch up with living standards in the developed world, the Financial Post reported citing the survey.
The two-month lockdown in China’s financial hubs triggered a sharp drop in China’s economic growth over the April-June quarter, as per reports. Despite an expected recovery in the second half of the year, economists believe the official target of around 5.5 per cent will not be achievable in 2022.
Furthermore, the demography of China has undergone structural change and it is also creating a demand-supply gap in a labour market.
Due to increasing decoupling with the US and allies, the annual growth is likely to further slowdown to around 3 per cent on an average between 2030-40 according to the Oxford Economics forecast, as cited by Finacial Times.
Moreover, China’s real estate slump could have a big negative impact on growth for several years. It is to be noted that it is now apparent that Chinese President Xi Jinping, does not prioritize economic growth above social and political factors.