November 2019: IIP Positive After 3 months

India’s industrial production expanded at a modest pace in November, reversing three consecutive months of contraction, but many sectors remained in the red.

Industrial growth, as measured by the index of industrial production, rose 1.8% in November compared with a 3.9% contraction in October, aided by a sharp growth in intermediate goods and a favourable base effect. IIP had risen 0.2% in November 2018.

The data is consistent with the slight pickup in the economy expected in the second half. Official estimates released by the government earlier this week showed GDP is likely to grow 5% in FY20, the slowest pace in 11 years. Given that expansion was 4.8% in the first half, second-half growth should be 5.2%.

13 out of 23 industry groups reported growth in the month.

Society of Indian Automobile Manufacturers data showed total passenger car sales in the domestic market fell 8.4% in December. Sales of passenger vehicles, including passenger cars, utility vehicles and vans, declined 1.2%.

Output contracted in four of the six sectors among use-based classifications. The intermediate goods sector grew by a sharp 17.1% while consumer non durables, an indicator of rural demand, was up 2%.

Production of capital goods, an indicator of investment activity, shrank 8.6%. Capital goods production has declined 11.6% on year in April-November. Production of consumer durables, a reflection of urban demand, contracted 1.5% in November, highlighting the underlying weakness in consumer sentiment toward big-ticket items, while that of primary goods shrank 0.3%.

Access to internet a fundamental right: SC

Freedom of speech and conducting business on the Internet are protected under the Constitution, the Supreme Court said while directing the Jammu and Kashmir administration to immediately review curb orders.

The top court also set the ground for challenging of all orders of preventive detention, the imposition of Section 144, and the internet shutdown by asking the authorities to publish every such order so that affected by them can challenge the orders in courts.

The top court also said that power under Section 144, which prohibits assembly of four or more people, cannot be used to suppress legitimate expression of opinion or grievance or exercise of any democratic rights.

It directed the authorities in the Union Territory to immediately review all orders suspending Internet services and said that orders not in accordance with the law must be revoked.

However, there was no mention of any time frame to restore the services.

It said Internet services cannot be suspended “indefinitely” and directed the J&K authorities to “consider forthwith” allowing government websites, localised/ limited e-banking as also hospitals and other essential services in areas where the services are not likely to be restored immediately.

Justice NV Ramanna, who read out the judgment, began by quoting the opening lines of Charles Dickens’s A Tale of Two Cities: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness...”

The court criticized the repeated use of Section 144, a colonial-era rule to ban large gatherings, in the former state that was bifurcated into two union territories as part of the government’s decision to scrap Article 370. “It can’t be used as a tool to oppress difference of opinion,” the court said.

“Our limited concern is to find a balance regarding security and liberty of people. We only here to ensure citizens are provided their rights. We will not delve into the political intent behind the orders given,” said Justice Ramana.

“Orders passed under Section 144 have direct consequences upon the fundamental rights of the public in general. Such a power, if used in a casual and cavalier manner, would result in severe illegality.”

The centre had justified the restrictions and said that due to the preventive steps, not a single life was lost and not a single bullet was fired.

Kashmir has been through the longest internet shutdown in any democracy. Kashmir’s chamber of commerce says the Internet shutdown cost the economy over 2.6 billion dollars and over 1 lakh people lost their jobs.

Besides Congress leader Ghulam Nabi Azad, the top court had heard the petitions filed by Anuradha Bhasin, Executive Editor of Kashmir Times, and others questioning the restrictions in Kashmir.

Passengers dip at Mumbai, Delhi airports

For the first time since 2008, India’s busiest airports—Delhi and Mumbai-—have seen a year-on-year dip in passengers in 2019 compared with 2018. While Delhi’s IGIA saw fewer domestic passengers, Mumbai’s CSMIA registered a fall in both domestic and international carriage.

Amid an overall slowing economy, the biggest reason for decline was Jet Airways’ collapse last April. IndiGo and Go-Air’s Pratt & Whitney engine troubles for their Airbus A320 Neos and SpiceJet’s grounded Boeing 737 Max also contributed to fewer flyers last year. Closure of Pakistan airspace for 138 days led to airlines cancelling flights to and from Delhi and Mumbai for varying durations. As a result, Delhi and Mumbai were deprived of the records they were hoping to achieve in 2019.

CSMIA had ended 2018 two lakh short of the 5-crore (domestic-cum-international) flyer mark at 4.98 crore. But Mumbai International Airport Ltd data for 2019 shows it handled 4.7 crore passengers — down 5.6%. Mumbai airport saw 3.38 crore domestic flyers in 2019, down 3.4% from 3.5 crore in 2018.

Meanwhile, international flyers fell 7% from 1.4 crore in 2018 to 1.3 crore in 2019.

Similarly, IGIA, India’s busiest airport, was just 2 lakh short of the magic 7-crore annual passenger (domestic-cum-international) mark in 2018 when it registered 6.98 crore flyers. Delhi International Airport Ltd’s (DIAL) provisional data for 2019 shows it handled 6.8 crore passengers — down 2.6%.

Delhi airport saw 1.9 crore international flyers in 2019, up 0.6% from 1.8 crore in 2018. Domestic flyers, however, fell 6% from almost 5.2 crore in 2018 to 4.9 crore in 2019.

The last time domestic air travel had dipped across India, say airline officials, was in 2008 when the global slowdown started but thanks to low cost carriers quickly spreading their wings in India, that issue was overcome from 2009 onwards.

While IGIA and CSMIA were Jet’s twin hubs in India and suffered the most from the airline’s collapse, India as a whole did not see a fall in number of air travellers. DGCA data for the full year 2019 is awaited. Its January-November data shows the country saw 13.1 crore domestic flyers in 11 months of 2019, up almost 4% from 12.6 crore in the same period of the previous year. DGCA’s January-June data shows India saw 3.19 crore international passengers in the first six months of 2019, up 1.2% from 3.15 crore in the first six months of the previous year.

Airports Authority of India saw a modest 5% growth to 14.8 crore domestic-cum-international passengers in January—November 2019 at its airports (not JV metro ones) over 14.1 crore in the same period of the previous year. However, these are a far cry from the double digit growths seen in past few years. Bengaluru and Hyderabad are yet to share their 2019 passenger numbers.

DIAL said in a statement: “….technical issues in aircraft engines (referring to PW engine trouble of A320 Neos)/newer aircrafts (referring to B737 max) impacted supply side of air traffic .”

India top geopolitical risk for 2020

India is one of the world’s top geopolitical risks for 2020, according to the Eurasia Group, one of US’ most influential risk assessment companies.

In their most recent report, the Eurasia Group said PM Narendra Modi has spent “much of his second term promoting controversial social policies at the expense of an economic agenda. The impacts will be felt in 2020, with intensified communal and sectarian instability, as well as foreign policy and economic setbacks.”

For the first time, the group had the US and its broken domestic politics as the “top” global geopolitical risk of this year. “We face risks of a US election that many will view as illegitimate, uncertainty in its aftermath, and a foreign policy environment made less stable by the resulting vacuum. ... a broken impeachment mechanism, questions of electoral illegitimacy, and a series of court challenges will make this the most volatile year of politics the US has experienced in generations.”

On India, the Group observes, the perception could grow that the Modi government’s focus on its social agenda would have an economic spillover. “Modi has less room to manoeuvre on structural reforms, just as the economy is starting to sputter, with quarterly growth falling to a six-year low of 4.5% and forward-looking indicators looking softer still. ... A weakened economy will in turn feed further economic nationalism and protectionism, weighing on India’s troubled course in 2020.”

The top risks include the technological “decoupling” between the US and China and the challenges that it poses to the world besides the enduring US-China tensions, which, the Group says will lead to “more explicit clash over security, influence and values.”

Countries and governments, the Group observed, will push back more and more against multinational corporations, with tougher nationalism-based regulatory frameworks. The EU, the group predicts, may increasingly push back against the unilateralism displayed by the US and China. Climate change will challenge companies and countries equally, creating conflicts between controlling emissions and bottomlines.

The Shia world, Eurasia Group predicts, may rise creating greater regional instability. Related, Turkey, it says, may be unravelling, which could be dangerous to others in the region. Latin American volatility and instability would be another source of risk.

Mumbai: Ropeway to link DN Nagar-Dahisar Metro 2A with Gorai across creek

Apex planning agency, Mumbai Metropolitan Region Development Authority, plans to link the DN Nagar-Dahisar Metro 2A corridor with Gorai by building a ropeway between Mahavir Nagar station and the island. An official said work on the project will start before monsoon.

“The ropeway is planned to provide last mile connectivity. The corridor will be connected to Mahavir Nagar Metro station. Along the last mile route it will provide connections to Charkop area, Pagoda and Gorai Village,” Metropolitan commissioner RA Rajeev said.

This will be the second ropeway in the metropolis as Mumbai Port Trust has already finalised plans for a ropeway between Sewri and Elephanta island. Earlier, MMRDA had planned a 3.6 km-long Charkop-Marve Village ropeway with stations, but it was not found feasible.

The Rs.500-crore Mahavir Nagar-Gorai ropeway will have eight stations for which spots have been short listed. “The tender will be floated by the end of next week,” an MMRDA official said. Asked about Coastal Regulation Zone norms, an official said the project would not violate any rules.

The MMRDA's plan has received mixed reactions from residents. “Affordability and frequency of services would matter. It could help those living in the interiors of Charkop to reach Kandivli by avoiding the heavily congested Link Road,” said Charkop resident Urmila Dev.

Gorai residents said the project was clearly aimed at benefiting tourists and authorities did not seem to care about the villagers. Neville D'Souza, an activist who works in Gorai village, “At present, residents of Gorai and Manori villages travel to Borivli through ferry. It suits them as the ride takes about five minutes and is discounted for locals. A majority of locals carry motorcycles aboard the ferry so they can use it to continue their journey after getting off at Borivli. The ferry service also provides villagers with employment. Most importantly, villagers from Gorai and Manori go out to sell vegetables. Would the ropeway system permit carrying such wares?”

Of Luxury Car Sales in 2019....

Sales of luxury cars in India declined by about 15% last year — the steepest drop in more than a decade — as a slump in economic activity, high import duty and expectation of a reduction in goods and services tax rates weighed on demand.

As per industry estimates, 34,500 to 35,500 luxury cars were sold in the country in 2019, compared with 40,340 units sold in 2018.

Luxury vehicles account for less than 1.2% of the overall automobile market in India, compared with 13% in China and 10% in the US. India has more than 350,000 millionaires, but the market size is yet to cross 50,000 units a year.

WB Pegs India’s Growth for FY20 at 5%

The World Bank cut India’s growth for financial year 2020 to 5% from 6% estimated earlier, a day after the country's statistics office pegged growth in the current financial year at 5%, the lowest in 11 years.

The multilateral lender expects the country’s growth to recover only slightly to 5.8% in the next fiscal year.

The bank’s Global Economic Prospects report released on Wednesday cited a lingering weakness in credit from non-banking financial companies as the main cause for the downgrade.

This is the slowest growth forecast since the 3.1% rate recorded in financial year 2008-09 when the global financial crisis had derailed the economy.

The World Bank’s latest update is also in line with the Reserve Bank of India’s October policy estimate in which it slashed the economy’s expected growth to 5% this fiscal year.

Global economic growth, is expected to rise to 2.5% in the current calendar year, underpinned by a gradual recovery in investment and trade from last year’s significant weakness, although downward risks persist, the report said.

Growth in advanced economies is likely to slip to 1.4% in calendar year 2020, in part due to softness in the manufacturing sector. Growth in the US is expected to ease to 1.8% due to tariff increases, while weak industrial activity will bring down the Euro region’s growth to 1% this calendar year, the report said.

On the other hand, growth in the emerging markets and developing economies is expected to accelerate this year to 4.1%. However, this rebound is not broad-based as the assumed improvement in performance is likely to come from a small group of large economies.

“With growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction,” said World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu.

In comparison, the report forecasts Bangladesh’s growth to ease to 7.2% for the fiscal year ending June 30 for the country, while Pakistan and Sri Lanka’s growth rates are expected to rise to 3% and 3.3%, respectively, in FY20.

It also estimates growth to rise to 5.5% for the South Asian region as a whole in calendar year 2020, on the assumption of a modest rebound in domestic demand and accommodative policy in India and Sri Lanka. The report also cites improved business confidence and support from infrastructure investments in Afghanistan, Bangladesh, and Pakistan for the expected uptick.