India’s robust export growth

As India’s half-yearly export figure is published, it can be safely forecast that GoI’s ambitious target of $400 bn merchandise exports for the year is likely to be met without a hitch. With the Covid pandemic seemingly on the wane, Indian exporters have been riding the momentum of global economic recovery and a surge in commodity prices worldwide.

Between April and September 2021, India clocked merchandise exports worth $197 billion, 57% more than the same period last year and a decent 24% rise over the corresponding period in the pre-pandemic 2019-20. The sectors that are leading the pack include engineering goods, gems and jewellery, petroleum products, pharmaceuticals, chemicals — in that order, according to data available with the ministry of commerce and industry.

An internal assessment of the ministry that analysed data till the end of September suggests that several commodities surpassed 50% export target in the first six months, according to an officer privy to the document. These include engineering goods (51%), petroleum products (52%) and chemicals (57%), giving hope that India will be able to meet the $400 bn target — which was reckoned as far too ambitious when minister Piyush Goyal announced it three and a half months ago.

The target, after all, was much more than the $313 bn in 2019-20. In 2020-21, total exports slipped to $292 bn. India achieved the highest ever merchandise exports — $330 bn — in 2018-19.

While robust exports have been a silver lining, the impact on India’s gross domestic product growth could only be marginal. The positives from an enormous export growth would be offset if consumption and investment — two bigger determinants for calculating output — remain fragile. The rising imports in April-September — 11% more than the corresponding period in 2019-20 — will also have an adverse impact on the GDP.

The GDP is calculated by adding the expenditures by three broad groups — households, business and the government. If one adds up consumption, investments, government spending and net export, the total output can be arrived at.

Pronab Sen who, as the chief statistician of India in 2007-10, got a first-hand experience of calculating the GDP, says exports contribute only about 14% of India’s output, far too low compared with other two drivers — domestic consumption, which powers about 62% of GDP, and investment, which contributes about 28%. The amount spent on imports is deducted from the total output.

So, while healthy export is a good sign for the economy, the government must immediately bring in policy interventions to boost consumption and investments, which in turn will power a faster GDP growth.

Virmani argues that states and the Centre must no longer be obsessed with short-term revenue maximisation via rate increases.

There is no ready data available to measure private consumption mid-year but most economists seem to be on the same page that the level of consumption in the country is still pretty low. Also, the private sector is reluctant to pump in money for building new projects. 

While the economic survey in January predicted an 11% GDP growth for FY2022, RBI forecasts 9.5%. Ahluwalia says 9.5% is also unrealistic.

All these arguments make it clear that exports alone can’t power a robust GDP growth and sustain it in the coming years. Yet, the story of an upsurge in exports bodes well for the economy, particularly when the pandemic is not yet over and the likelihood of a third wave is hanging like a sword of Damocles. The question is whether $400 bn-plus exports can be sustained.

NITI Aayog Vice-Chairman Rajiv Kumar says the upswing will continue as many countries are shifting their sourcing bases from China as they want to reduce their dependence on one country. Also, the global trade as a whole is increasing, and so is the share of trade in global GDP, he says. He also says that the government’s recent Production-Linked Incentive Scheme, which incentivises companies to undertake incremental sales of products manufactured in India, will be helpful in this regard.

Former commerce secretary, Anup Wadhawan, says there is enough elbowroom for Indian exporters to explore. 

Clearly, India needs to promote export diversification to accrue long-term dividends. But in the short run, the focus should remain on boosting domestic consumption and investments — the key engines to drive economic growth on a sustained basis, which exports alone will fail to accomplish.

5 killed as heavy rain triggers landslides & floods in Kerala

Five people were killed and 20 were listed missing on Saturday as heavy rain pounded south and central Kerala causing flash floods and landslides in many parts, prompting the state government to seek the assistance of the Army and Air Force for rescue operations.

Weather experts attributed the intense spell, which saw many places recording more than 5 cm of rainfall within a span of two hours, to a ‘mini-cloud burst event’. Peermade recorded the highest rainfall in the state with 24 cm followed by Cheruthoni, Chalakudy and Poonjar at 14 cm. Six districts were put on red alert on Saturday. According to IMD’s daily monsoon report, Kerala received 74% excess rainfall on Saturday. Between Oct 7 and October 13, the state has received 166% excess rainfall averaging about 19 cm rain.

Several people were injured and displaced in rain related incidents. Dams in many districts are nearing their full capacity and small towns and villages in hilly areas are cut off from the outside world. Kottayam and Pathanamthitta are the most affected districts as of now. “The situation is grievous,” chief minister Pinarayi Vijayan said.

Air Force and Army have deployed their assets in Kottayam, Idukki and Pathanamthitta. Army personnel from Pangode Military Station have been rushed to flood-affected areas. Mi-17 and Sarang helicopters are on standby to meet the requirements at Sulur air base. However, due to bad weather, they could not be operated till late evening. All bases under Southern Air Command have been put on high alert in view of the prevalent weather situation, said a defence spokesperson.

Kashmir: Two Workers from Bihar & UP Killed

The bodies of two soldiers were found in Poonch district of Jammu and Kashmir on Saturday, the sixth day of anti-militancy operations in the region.

The soldiers--identified as Subedar Ajay Singh and Naik Harendra Singh--were part of the army’s anti-militancy operation with J&K Police in the densely forested area of Mendhar sub-division of Poonch. The two had been missing since October 14. So far nine soldiers have been killed by militants in the latest standoff.

“After a fierce fire fight with terrorists on October 14, the communication with Subedar Ajay Singh and Naik Harendra Singh was disrupted. Relentless operations continued to neutralise the terrorists and to re-establish communication with the soldiers,” a defence spokesperson based in Jammu said. He said the anti-militancy operation is still on in the area.

No infiltrator has been caught or killed in the operation so far. The operation, which started in Thana Mandi of Poonch area on October 11, has now spread over a wide forest range falling in the two neighbouring districts of Poonch and Rajouri in the Jammu division.

This is one of the biggest operations this year in the Jammu division, where at least eight encounters have taken place since July. So far, 12 army men--including three junior commissioned officers-and 10 militants have been killed.

The authorities have closed one of the main roads connecting Poonch and Rajouri for public transport and army convoys near the forest where the encounter is on. Officials claim to have opened an alternative route for vehicles.

“Inputs regarding the presence of this group in the area have been coming for over two months now. We were following the leads and this operation is in continuity with that,” a senior police officer told ET.

Meanwhile, unidentified gunmen shot dead two vendors within a span of 30 minutes on Saturday evening, in two separate incidents in Srinagar and Pulwama districts. One of the vendors killed in the Eidgah area of Srinagar was identified as Arvind Kumar of Bihar, while the other was identified as Sagir Ahmad of Uttar Pradesh.


IPL Finals: Dhoni’s Chennai Super Kings Knock Off Kolkata Knight Riders

 An adoring Chennai Super Kings fan brigade cheered MS Dhoni on from all corners of the world, his family waved from the stands, as Captain Cool did it one more time. Maybe, for the last time!

When CSK returned from a two-year exile in 2017, Dhoni decided that he would build a Dad’s Army because he believed there’s no alternative for experience on the IPL stage.

The ‘daddies’ justified the captain’s theory time and again over the next four years and Dubai on Friday, became their platform to sign off with a bang. Probably playing together for the last time together before a new auction next season, the super seniors of CSK played a match straight out of the dreams to beat Kolkata Knight Riders and give the skipper his fourth IPL title.

The 37-year-old South Africa reject Faf du Plessis, a 35-year-old semi-retired Robin Uthappa and a 34-year-old RCB reject Moeen Ali showed what it means to have experience as CSK ran away with a score of 192-3 against a decent KKR attack. Even when KKR were batting, with Venkatesh Iyer and Subhman Gill having given them a rollicking start, it was 38-year-old Dwayne Bravo who with his two overs gave away only eight runs and stemmed the flow. Then it was over to the likes of midlevel seniors Ravindra Jadeja and Shardul Thakur who have done it time and time again to use the slowness of the wicket and run away with the 27-run victory.

Before that, it was the game-sense of Faf that set CSK on course after KKR captain Eoin Morgan won the toss and put them in. It was expected that the spin troika of Sunil Narine, Varun Chakravarthy and Shakib Al Hasan would make a difference before the dew set in.

But Faf, aided by a missed stumping by Dinesh Karthik off Shakib when on two, had other ideas. He looked to initially play with a sense of caution as Orange Cap winner Ruturaj Gaikwad (32 off 27 balls) took the early initiative to unsettle Shakib. The beauty of the Faf ’s 86 off 59 balls was that there was absolutely no sense of rush. He decided to take on the pacers Shivam Mavi and Lockie Ferguson while the heavy lifting against spinners was left to Uthappa and Moeen.

4 IT cos add 1L to staff strength in H1

India’s four top IT firms – TCS, Infosys, Wipro and HCL – have seen their combined employee strength rise by over 1 lakh in the first six months of the fiscal year. That’s 13 times more than in the corresponding period last year, when the pandemic struck. It’s also almost twice that in the corresponding period of the pre-pandemic 2019-20.

It’s an indication of how much demand has picked up in IT services. Enterprises around the world are trying to digitalise their operations, with the pandemic underscoring how important that is for sustainability. There’s a big movement to cloud because of its ability to scale IT requirements up and down very quickly. That movement to cloud is also opening new opportunities in analytics, AI & in internet of things. Digitalisation has proved a fertile ground for cyber criminals, and that has, in turn, led to massive demand for cyber security.

TCS, which has 5.2 lakh employees, led the hiring momentum, adding 40,000 employees in the past six months. Infosys added around 20,000 employees, Wipro 23,650, and HCL Technologies 18,657.

TCS has said it plans to make offers to 75,000 freshers this year, a record for the company. TCS CEO Rajesh Gopinathan said, “The conviction in technology and the momentum in this is increasing.” He said the cloudbased transformation represents an architecture change in IT. “It’s resulting in a bottom-up rethink as to what is the new architecture and what are the new things that we can do,” he said. Cloud, he said, is also enabling capex to be replaced by opex, allowing enterprises to do a lot more experiments. On the hiring momentum, Gopinathan said the last time TCS saw this was in 2011-12, coming out of the financial crisis.

Last week, Infosys raised its revenue guidance for the year for the second time, an indication of how quickly demand is picking up. The company has increased its fresher hiring target for this year to 45,000, from 35,000 that it had planned three months ago.

Wipro CEO Thierry Delaporte said the demand environment is very strong “and the pipeline, which is the highest in recent quarters, is a reflection of that.”

HCL Technologies CEO C Vijayakumar said, “We witnessed the highest net hiring numbers in the previous quarter, 11,153. Net hiring over the past three quarters has been at about 28,000 in our employee workforce and there’s another 3,500 in terms of third-party contractors. So, the total is pretty much near 32,000 over the past three quarters itself,” he said.

Some of the hiring by companies is to deal with high attrition rates. Infosys’s attrition past quarter rose to 20.1%, from 13.9% in the June quarter. Other companies have also seen attrition rates soar.

Gopinathan said TCS had, some years ago, anticipated the need for massive hiring, and so had redesigned the fresher hiring system. The traditional system involved a lot of campus visits. Now, the company conducts a national test that anyone can take. Hiring is based almost entirely on the performance in the test. Not only is this easier, it allows access to a much wider pool of talent.

Goal is to make India world’s biggest military force : PM

The seven defence public units carved out of the mammoth Ordnance Factory Board will become a strong base for India’s military strength in the years ahead, Prime Minister Narendra Modi said on Friday, urging the new entities to make research and innovation an integral part of their work culture.

Under the “Atmanirbhar Bharat” campaign, the goal is to make India “the world’s biggest military power on its own” and develop a modern defence industrial base, said the PM, in a video address at an event to dedicate the seven new defence companies to the nation on the occasion of Vijayadashami. Defence minister Rajnath Singh, national security adviser Ajit Doval and the military brass, among others, attended the event.

“Today, there is more transparency, trust and a technology-driven approach in the country’s defence sector than ever before. For the first time after Independence, so many major reforms are taking place in our defence sector and instead of stagnant policies, a single-window system has been arranged,” the PM said, noting that the OFB reform was pending for the last 15-20 years.

The OFB was dissolved on October 1, with its 41 factories, assets, employees and management being transferred to the seven new 100% government-owned companies in accordance with the Cabinet decision to corporatise the entity.

The restructuring is designed to make the seven PSUs functionally autonomous, more productive and cost-efficient as the main suppliers of arms, ammunition and clothing to the 15-lakh strong armed forces.

“You (the seven companies) not only have to match the world’s biggest companies, but also take the lead in future technology… become global brands. Competitive costs are our strength, quality and reliability should also become our identity,” said Modi.

The new companies, with an order book of over Rs 65,000 crore, will also play an important role in import substitution. “I will also tell start-ups that they should also be part of this new beginning that the country has started today through these seven companies,” the PM said.

Citing the various reforms undertaken by the government, including the two defence industrial corridors set up in UP and Tamil Nadu, the PM said various Indian companies were now also exploring possibilities in the defence production arena.

“The private sector and the government, together, are moving ahead in the mission to ensure defence of the nation. This is also creating new opportunities for the youth in the country, and opening up new possibilities for many MSMEs in the form of supply chains. As a result of the policy changes in the last five years, our defence exports have increased by more than 325%,” he added.

The world had seen the strength of India’s ordnance factories at the time of World War-I and II. “After Independence, we needed to upgrade these factories, adopt new-age technology. But it was not given much attention. Over time, India became dependent on foreign countries for its strategic and defence needs. These new seven defence companies will play a big role in bringing change in this situation,” the PM said.

Modi & Johnson to launch global solar power grid

India and the United Kingdom will jointly launch the Green Grids Initiative-One Sun One World One Grid -- a trans-national grid to transport solar power to different countries – during world leaders’ summit at the beginning of the 26th session of the UN climate change conference in Glasgow, UK in the first week of November.

The initiative, announced by Prime Minister Narendra Modi three years ago, will be endorsed in the form of a political declaration by the fourth general assembly of the International Solar Alliance during October 18-21.

Sources said Modi would attend the world leaders’ summit on November 1-2 at COP26 and launch it with UK Prime Minister Boris Johnson in presence of other heads of state/government. An official confirmation to this effect would be conveyed to the UK soon, they added.

US President Joe Biden, Australian PM Scott Morrison and other leaders will also attend the summit during the first half of the COP26 which would see countries finalise rules of carbon market mechanism (Article 6) under the Paris Agreement. The Article 6 rules are the last piece of the Agreement which are yet to be finalised.

Implementation of the OSOWOG will revolve around the concept that the ‘Sun Never Sets’ and is, therefore, a constant at some geographical location, globally, at any given point of time. The ISA, which was jointly launched by India and France on the side-lines of the COP21 in Paris in 2015, will be the implementing body of the global grid.

The ISA fourth general assembly next week will be an occasion where 80-member countries of this intergovernmental body see how to go about the OSOWOG in a manner which may help the world reach its collective mitigation goal of limiting global warming at 1.5 degree C by 2050 from the pre-industrial (1850-1900) levels.

The assembly will deliberate on the strategic plan of the ISA for the next five years. It will cover different issues including strategy for private sector engagement. Besides updates on ‘One Sun One World One Grid’ initiative, the ‘Trillion Dollars Solar Investment Roadmap for 2030’ will also be the focus of the ISA meet. According to the ISA’s concept note on OSOWOG, the global solar grid will be implemented in three phases.