Archive for March, 2015

FDI Doubles to $4.48 Billion in January, Highest in 29 Months

March 31, 2015

Foreign Direct Investment (FDI) in India more than doubled to USD 4.48 billion in January, the highest inflow in last 29 months.

In January 2014, the country had received USD 2.18 billion in FDI. It was in September 2012 that India had attracted FDI that was worth USD 4.67 billion.

During the April-January period of the current fiscal, the foreign inflows have grown by 36 per cent, year-on-year, to USD 25.52 billion, according to data from Department of Industrial Policy and Promotion (DIPP).

The inflows were at USD 18.74 billion during the same period a year ago.

Amongst the top 10 sectors, telecom received the maximum FDI of USD 2.83 billion in the 10-month period, followed by services (USD 2.64 billion), automobiles (USD 2.04 billion), computer software and hardware (USD 1.30 billion) and pharmaceuticals (USD 1.25 billion).

During the period (April-January), India received the maximum FDI from Mauritius at USD 7.66 billion, followed by Singapore (USD 5.26 billion), the Netherlands (USD 3.13 billion), Japan (USD 1.61 billion) and the US (USD 1.58 billion).

In 2013-14, FDI stood at USD 24.29 billion as against USD 22.42 billion a year earlier.

Healthy inflow of foreign investments into the country helped India’s balance of payments (BoP) situation and stabilised the value of rupee.

India is estimated to require around USD 1 trillion over five years to overhaul its infrastructure sector, including ports, airports and highways to boost growth.

Government is taking steps to boost FDI in the country.

It has relaxed FDI norms in sectors including insurance, railways and medical devices.



India to grow at 7.8 per cent in 2015-16; surpass China: ADB

March 31, 2015

The Asian Development Bank has forecast that India’s growth rate could surpass that of China owing to the government’s pro-investment attitude, which, coupled with an improvement in macroeconomic indicators and forward movement in resolution of structural bottlenecks, has propelled the country back on foreign investors’ radar.

India is set to expand 7.8 per cent in 2015-16 compared with 7.4 per cent growth in the current fiscal. This momentum is expected to build to 8.2 per cent growth in 2016-17, aided by expected easing of monetary policy and a pickup in capital expenditure. In the case of China, further slowing of investment is expected to diminish growth to 7.2 per cent in 2015-16 and 7 per cent in the next fiscal. “India is expected to grow faster than the People’s Republic of China in the next few years. The government’s pro-investment attitude, improvements in the fiscal and current account deficits, and some forward movement on resolving structural bottlenecks have helped improve the business climate and make India attractive again to both domestic and foreign investors,” said ADB’s chief economist Shang-Jin Wei.

The Manila-based multilateral lender said India’s prospects look promising as policy measures introduced by the government have pushed the central bank’s business expectation index to its highest level in two years while identifying recent measures including accelerating environment clearances for infrastructure projects, easing the process of land acquisition for infrastructure and industrial corridors, allowing auction of coal mines to the private sector and easing the compliance burden of labour laws on small and medium-sized industries as key drivers.

The impetus given to capital expenditure in the recent budget will improve the expenditure mix significantly and bodes well for growth prospects, it said.

Giving a thumbs up to the new Monetary Policy Framework announced in the budget, ADB said the measure will help restrain inflation and improve the coordination between monetary and fiscal policy.

On external sector, the bank’s chief economist said that the Indian government and the Reserve Bank of India have been trying to build up reserves and frame policies to monitor risk.

“India is in a stronger position today than what it used to be. The government is making effort to increase FDI to deal with financial instability,” Shang-Jin said. The bank said the country’s most pressing policy challenge is to promote cities as engines of economic growth and jobs. “To fully reap the benefits of urbanisation, the government must make further efforts to coordinate urban and industry planning to attract industries into cities, and provide the necessary supporting infrastructure,” it said.

Source: Economic Times

Hotel industry to reach Rs 230 bn, growing at 12.2%

March 31, 2015

The Indian tourism and hospitality industry has materialised as one of the key drivers of growth among the services sectors in India. It contributes to 6.23 per cent to the national GDP and 8.78 per cent of the total employment in the country. Constant transformation, functional growth and improving standards have gained the hospitality industry of India approval all over the world.

The industry is broadly compartmentalised into two segments
Tourism: The tourism sector includes medical and healthcare tourism, adventure tourism, heritage tourism, ecotourism, rural tourism, wildlife tourism and pilgrimage tourism.

Hotels: These include business hotels, suite hotels, resort hotels, airport hotels, extended stay hotels, apartment hotels, resort hotels, timeshare hotels, casino hotels, convention centres and conference centres.

Several foreign players have established their strong presence in the country’s hospitality spaces. These foreign companies mainly include Accor, Starwood, Marriott, Premier Travel Inn (PTI), Cabana Hotels, Mandarin Oriental, Hampton Inns, Banana Tree, Satinwoods, and Amanda. Some reputed Indian companies leading in the hospitality sector include Asia Hotels, ITC, East India Hotels (EIH), Bharat Hotels, Hotel Leela venture and last but not the least, Indian Hotels Company (IHCL).

According to the data released by Planning Commission, Indian hospitality sector is the second largest employer in the country as it is capable of offering employment opportunities to a wide range of job seekers from professional to unskilled workers.

By 2015, the Indian hotel industry is expected to reach Rs 230 billion, growing at a robust CAGR of 12.2%. India will be investing approx Rs 448 billion in the hospitality industry in the next five years.

India is currently ranked 12th in the Asia Pacific region and 68th overall in the list of the world’s attractive destinations, according to the Travel and Tourism Competitiveness Report 2011 by the World Economic Forum (WEF).

Top hospitality trends for 2015 that are going to dominate the Indian traveler’s:

Everything online
The most significant development in 2015 is going to be the increased use of internet, particularly social media, and technology by consumers while taking decisions pertaining to their travel itinerary.

The fascination of the millennial with their digital devices is not a mystery. 2014 marked the e-commerce boom in India. It seems even those less trusting of the faceless internet; trust it with their money now. The convenience is unquestionable. In a survey by Google and Ipsos MediaCT, 70% respondents claimed to begin researching online before deciding where or how they want to travel. More and more Indians are looking up to the internet to find new experiences to enjoy.

Users are looking for smoother interfaces to identify new travel locations and make bookings.

Digital transparency
With large capital infusions by hoteliers into new properties, at almost every price level, in the recent years has led to a situation where the supply exceeds the demand and shifted the pricing power to the consumer.

With competitively priced rooms in every market segment, the choice of a hotel boils down to the service. And how does one learn about the level of service without even visiting the establishment even once? By simply experiencing it vicariously through other’s reviews.

People are no more silent about a bad experience. They lash out and without mercy. Online opinions by guests play a very important role in guiding purchase behavior within their circles of influence. From aggregated ratings to extensive review, a single disappointed guest could result in a butterfly effect that could lead to a lot of lost sales for hotels. The hotel managers need to be on their toes and be prepared to deliver beyond a guest’s expectations

Rise of the meta search
The desire for instant gratification of the Millennials has spawned a new breed of web properties that cater to their need for instant and more efficient ways to access information. These digital properties are meta search engines. Meta search engines like Google Hotel Finder, TripAdvisor, Kayak & Trivago offer users the ability to take informed decisions on booking hotel rooms without having to jump around from one hotel’s website to another.  These meta search engines offer real time room availability and pricing from multiple sources along with pictures and detailed information about the hotels.

Search of an experience
The modern day consumers are all about instant gratification. They don’t wait and plan. They just go. No time to stop and think. And once again aiding this obsession is the power of online information. The year should see a significant rise in the number of people who spontaneously decide to vacation and select destinations on the go.

While earlier large marketing budgets decided which hotel offered a richer experience, today it is not the case. Today the consumers tell the story in their own words and there are always prospective guests listening.

The availability of the wide choice in the travel market has resulted in travelers, even business travelers, wanting an experience rather than accommodation. Travelers today do not shy away from smaller independent properties for the sake of experiencing something new. The popularity of Airbnb is a testament to this fact.

Offline means off
The woes of the traditional offline travel agents are going to continue. According to Internet and Mobile Association of India (IAMAI) and IMRB, the air tickets booked online in April 2014 were 1.78 million compared to 0.78 million in the corresponding month last year registering 110 percent growth. Another survey by MakeMyTrip revealed that 97% Indians preferred booking hotels online.

The travel agents had their moment in the pre-internet days. The ease of booking flights and hotels without any intervention is more convenient to the modern day traveller.

Going mobile
The desktop, the laptop and now smartphones. The power to the consumers seems to be increasing inversely to the package size. Every user with a smartphone in their hands has access to a rich world of information. With just a few taps, the modern day traveller can compare rates and amenities offered by hundreds of properties. One can locate rooms as per their needs, compare them for the lowest rates and book one for themselves on the ride from their home to the airport. Mobile bookings also facilitate the urge of the modern day consumers for instant access to information and unplanned travel. Bookings are just a part of the story though. Hotels are also using mobile devices to enhance the guest experience during the stay. The Starwood Hotels have been testing Apple iWatch’s functionality to implement keyless entry for guests in their hotels

Healthy holidays
There is a marked rise in concern regarding health in India. 2015 should bring with it a wave of health conscious travelers. From guests who need their morning yogurt to travelers wanting to get away from the unhealthy lifestyle. The health-mania is sure to affect the hotels and they need to be ready to cater to them. While most large chains that cater to international travelers carry an option of healthy food items, the smaller independent hotels need to put it into consideration as well. The health bug is not limited to high roughage meals and low-calorie drinks. Ganga Kinare, an independent hotel in Rishikesh, hosts the annual International Yoga Festival held there. It sees participation from over 200 participants around the globe. Thereby, seamlessly transforming from a boutique hotel to a health retreat and providing its guests a unique healthy experience.

Most of the trends pivot around the increased proliferation of internet and technology in India and so must be embraced by hoteliers as well. It’s no longer about just the product, price, service or feature on offer. Rather it is about building a rapport and trust with the new generation customer in a world that is always-on and always connected.

The Indian hotel industry is seeing huge spurt of foreign investment and international brands entering the foray. The Indian government’s policy regime and a robust business environment have ensured that foreign capital keep flowing into the country. The government has taken many initiatives in recent years there are many Opportunities available for foreign investors to invest in Indian Hospitality industry such as:

  • The Indian hospitality sector has been growing at a Cumulative Annual Growth Rate of 14% every year. The existing gap between demand and supply of hospitality services is expected to widen further as the Indian economy grows. The Indian government estimates the requirement of more than 200,000 rooms by the end of this year. This is where a real opportunity lies for foreign investors to invest in the Indian hospitality sector.
  • Most of the reputed foreign players have already collaborated with Indian companies which are into hospitality business. Foreign investors have set up modern motels, hotels and lavish holiday resorts in metropolitan cities of India. The entry of famous foreign players like Kentucky Fried Chicken, McDonald’s, Pizza Hut and Domino’s has offered an international glitz to Indian hospitality sector and it welcomes more foreign players to expand in India.
  • Indian Five Star hotel segment has grown very rapidly in the last few years at a growth rate of 12 percent. This segment can be categorized into three sub segments which are Business, Luxury and Leisure. Over the last couple of years, the country has demonstrated large influx of corporate travelers owing to relaxation offered by Indian government for FDIs to invest in Indian hospitality sector.
  • Meetings, Incentives, Conferences and Exhibitions (MICE) group has also played an important role in Indian tourism and hospitality industry. It serves especially to business travellers, mainly foreign tourists. It caters to different forms of international conferences, business meetings, conventions, exhibitions and events.
  • The constant interest of foreign players in Indian hospitality market demonstrates its potential as a strong sector in times when other sectors are facing the heat of Euro zone crisis.

The Government of India and the Ministry of Tourism have contributed significantly to the growth and development of the industry by providing various policy measures, tax incentives and infrastructural support such as

  • Promotion of rural tourism by Ministry of Tourism in collaboration with the United Nations Development Programme
  • Availability of Medical Visa for tourists coming into the country for medical treatment
  • 100 percent FDI allowed through automatic route in hotel and tourism sector
  • Insurance of visa on arrival for tourists from select countries like Finland, Japan and New Zealand
  • Capital subsidy programmes for budget hotels
  • Elimination of customs duty for import of raw materials, equipment, liquor etc.
  • Five-year income tax holidays for 2-4 star hotels established in specified districts having UNESCO-declared ‘World Heritage Sites’

The key challenges that the industry faces today are infrastructure, regulatory, availability of product bouquet, rising inflation, intercultural differences and the biggest amongst them the shortage of skilled manpower. India, known the world over as the land of hospitality – is today in the defining stages of the business of hospitality and with unlimited tourism and untapped business prospects. In the coming years Indian hospitality will only see green pastures of growth.


Foreign love for Indian corporate bonds

March 31, 2015

Indian corporate debt has become the new darling of foreign institutional investors (FIIs). They have invested Rs.1 trillion in corporate bonds since the beginning of the current fiscal year.

The FII attraction for corporate debt paper has accelerated in the past six months. That’s because, since August, FIIs are close to exhausting the $30 billion limit of government bonds they are allowed to buy. From worrying over growth, inflation, current account deficit and the rupee’s volatility, FII talk is now about which corporate paper to buy, said Siddhartha Sanyal, India economist at Barclays Plc.

The interest in corporate debt is high enough for FIIs to take a three-year view on the rupee and interest rates. Earlier, foreign investors were allowed to invest in bonds with one-year tenor, but recently, the central bank stipulated that they could buy paper only with a minimum tenor of three years. To be sure, this investment decision has been helped by easing of some economic conditions in India over the past half year.

The current account deficit has narrowed to 1.6% of economic output in the latest reading while inflation seems to have come under control as the central bank’s last two rounds of rate cuts show. AAA and AA-rated five-year corporate bond yields have declined around 1 percentage point and 70 basis points, respectively, in the last six months owing to expectations of further rate cuts and strong inflows. But as the $51 billion limit of corporate debt investments for FIIs gets filled (it is already 50% utilized), interest is slowly moving towards lower AA+ and AA- corporate bonds.

Fresh corporate paper is also coming into the market as many manufacturing companies are raising money through this route to refinance their existing loans, said Santosh Kamath, managing director—local asset management, fixed income at Franklin Templeton Investments.

This is not surprising because despite half a percentage point rate cut by the Reserve Bank of India, banks are still reluctant to cut lending rates. AA yields are as low as 8.9% compared with bank base rate of around 10% and liquidity is also improving. However, this heavy inflow of FII money comes with a risk. In 2013-14, when the rupee was extremely volatile and went into a tailspin after the US Federal Reserve first mentioned it will raise rates, there were outflows of over $4 billion from the debt market.

It is also pertinent to note that around 60% of FII money in this area comes from shorter-term investors—those who might switch money from India at the slightest whiff of rising interest rates in the US or a currency episode.

Source: Livemint

Foreign policy playing key role in economic development: Sushma Swaraj

March 31, 2015

Foreign minister Sushma Swaraj on Thursday said India’s foreign policy was playing a key role in supporting economic development outlined by Prime Minister Narendra Modi.

Addressing the Growth Net conference organized by Anantha Aspen Institute, Swaraj said her ministry had taken specific steps to foster India’s economic engagement and outreach. “We have stepped up commercial divisions in our missions around the globe. The vision of the government is to empower people and bring about economic development.

The foreign policy priorities are aimed at creating the right external environment for the same,” she said. Swaraj also said Modi’s emphasis on cooperative federalism had resulted in the external affairs ministry starting a new division in the ministry to help states in the country to work with foreign governments to bring in investments.

The government had raised the cap of foreign direct investment (FDI) in key sectors like defence, railways and insurance – that would help attract foreign capital, she said.

Echoing Modi, the minister said the 3 D—democracy, demography and demand—advantage will make India a better destination for foreign investment. Modi stressed these factors during his visit to Japan in September.

Swaraj, who is also in-charge of the ministry for overseas Indian Affairs, said the vibrant Indian diaspora is the most valuable partner in India’s development.

Source: Livemint

High wage costs in China offer India chance to be global manufacturing hub: FM Arun Jaitley

March 31, 2015

Finance Minister Arun Jaitley today said higher wage cost in China presents the best opportunity forIndia to turn into a global manufacturing hub.

“Wages in China have gone up. That part of the world is now becoming costlier. Can we, therefore, create a world class infrastructure in India,” he said while addressing the Annual Day celebrations at Shri Ram College of Commerce (SRCC) here.

India is already armed with good human resources and institutions of various kind, making the cost of capital reasonable, he added.

“Can the cost of our capital not be reasonable… all these issues of efficiency, quality improvement, that’s where the opportunity awaits us in creating mass jobs and that is the best possibility of India (in) removing poverty,” he said.

The government has launched ‘Make In India’ initiative to increase manufacturing in the country. At present, the share of manufacturing in GDP is very less as compared to developed nations.

Source: Economic Times

India holds ‘Make in India’ fortnight in Germany

March 31, 2015

Ahead of Prime Minister Narendra Modi’s visit to Germany next month, a ‘Make in India’ fortnight has been held near here which included a series of events highlighting initiatives to make India a preferred investment destination.

The Indian Consulate in Frankfurt, in close cooperation with the city authorities of Cologne, about 190 kilometres from here, organised a grand road show on Friday which was the concluding event of the ‘Make in India’ fortnight series.

The series of events were organised by the Consulate in the lead up to Modi’s upcoming visit to Germany to inaugurate the Hannover Trade Fair where India will be the partner country.

In his address, Consul General Raveesh Kumar emphasised on the importance of this campaign and highlighted the positive developments that are being undertaken by the Indian government to make India a manufacturing hub and a preferred investment destination.

The Lord Mayor of Cologne Juergen Roters, while lauding the initiative of the Indian government, highlighted the special relationship that the city shares with India and invited Indian companies to invest in Cologne.

Subhra Singh, Joint Secretary, Department of Policy and Promotion (DIIP), Ministry of Commerce and Industry, was especially invited from India to throw light on the various aspects of the ‘Make in India’ initiative and its relevance to the German investors.

The ‘Make in India’ initiative was launched by the Indian Consulate in Frankfurt in cooperation with HCL on March 11 with an event in the city of Ludwigshafen that had a special emphasis on data security.

India is participating as the partner country at Hannover Messe, April 13-17, under the theme ‘Make in India’.

Source: Economic Times

FPI: Foreign fund inflows hit $13 bn

March 31, 2015

With overseas investors pumping in over USD 3 billion in the Indian capital markets this month, total foreign inflows have touched USD 13 billion since the beginning of the year.

Analysts expect the inflows to accelerate further in view of Parliament clearing bills related to insurance, coalallocation and mining as well as assurances in the Budgetto revisit controversial issues like General Anti-Avoidance Rule.

Foreign Portfolio Investors (FPIs) have bought shares worth Rs 11,813 crore (USD 1.9 billion) from March 2-27. In the debt segment, the net inflows were Rs 8,912 crore (USD 1.43 billion), taking the total to Rs 20,725 crore (USD 3.33 billion), as per the data compiled by Central Depository Services Ltd.

The inflows have taken the foreign investment level in the country’s capital markets (equity and debt segments) to Rs 79,000 crore (about USD 12.75 billion) so far this year.

Market participants attributed the robust inflows to positive investor sentiment driven by the government’s announcement of several reform measures.

Besides, Finance Minister Arun Jaitley announced a slew of measures to attract overseas investment in the country in the recent Union Budget.

In 2014, the net inflows by overseas investors in debt markets was Rs 1.59 lakh crore, while the figure for equities stood at Rs 97,054 crore. Overall net investment by foreign investors stood at Rs 2.56 lakh crore last year.

To soothe investors’ nerves, Jaitley had deferred the controversial GAAR by two years, saying that its immediate applicability can create ‘panic’ in markets.

Source: The Financial Express

Global central banks increase their share of FII investments in India’s debt markets

March 21, 2015

A stable currency, low volatility in bond yields, and a relatively high risk-adjusted return have prompted many global central banks to increase their investments in India’s debt markets in the past three years. According to data compiled by ETIG, of the total FII investment in India’s debt markets, the share of global central banks has increased to 15% in January 2015 from 2% three years ago.

FIIs hold nearly $60 billion (Rs 3,12,000 crore) in Indian debt market, with half the money flow coming in 2014. Interestingly, foreign central banks hold 1.81% share in the total outstanding FII investment in Indian equities. A key reason for increased investment by global central banks in Indian debts is the near zero yield in developed markets. Besides higher yields, developing markets like India are also offering higher risk-adjusted return.

According to banking circles, monetary authorities of Norway, Singapore, Malaysia, and Middle-East are among the most prominent ones investing in Indian debt. These central banks have to register with capital market regulator Sebi as foreign portfolio investors (FPI) in order to invest in Indian debt securities. For instance, Norway’s central bank is registered as Norges Bank in the FPI category, according to the Sebi website.

According to a study by Official Monetary and Financial Institution Forum (OMFIF), an independent research and advisory group based in London, in recent years, central banks around the world have foregone between $200 billion and $250 billion in interest income as a result of the fall in bond yields in developed markets. This is causing them to look at other relatively ‘safer’ avenues with more risk- adjusted returns.

Pooma Kimis, director of markets and institution at OMFIF said, “A number of central banks has taken the decision to park their funds into emerging markets’ debt segment, of which Indian debt is probably one of the more attractive products available.”

Shalin Shah, India economist at London-based Capital Economics, said, “Indian bond yield is at 7.5% compared with sub 2% yields in developed markets. India offers one of the compared with developing markets’ currencies. Some experts consider that growing foreign central banks’ exposure is a clear reflection of increasing credit worthiness and makes a case for a rating upgrade. According to Madan Sabnavis, chief economist at the rating agency CARE, increasing global central banks’ investment in  in Indian debt shows that they perceive the Indian bond market is more safe and reliable and this could result in a rating upgrade.

Also, a stable currency lowers hedging cost, says Ajay Manglunia, senior vice-president, fixed income at Edelweiss Securities, a broker.

Source: Economic Times

India to emerge as fastest-growing large economy: Lagarde, IMF Chief

March 20, 2015

Speaking at the city’s Lady Sri Ram College on Monday, International Monetary Fund (IMF) Managing Directorsaid India’s rate was expected to exceed China’s this year, and the country might also overtake China as the world’s most populous country by 2030.

remains optimistic in its assessment of India. According to Lagarde, recent policy reforms and the improved business confidence, presumably due to the outcome of last year’s general elections, have provided a boost to economic activity. IMF expects India’s growth to pick up to 7.2 percent this financial year, and to accelerate to 7.5 per cent next year. With China slowing down, this means will likely emerge as the world’s fastest-growing large economy.

The Fund estimates the size of India’s economy by 2019 to be twice as much as in 2009. Adjusting for purchasing-power parity, India’s gross domestic product (GDP) will exceed the combined of Japan and Germany. India’s production, too, also exceed the combined output of the next three largest emerging-market economies — Russia, Brazil, and — IMF projects.

Further, by 2030, India could have the largest pool of workers in the world. Estimated in excess of one billion, India’s labour force would be larger than the combined labour force of the US, the euro area, and Indonesia. So, the potential benefits could be enormous.

Giving a thumbs-up to the fiscal consolidation road map presented in the Union Budget for 2015-16, Largarde welcomed the adoption of the new monetary framework.

On the issue of how to make India’s growth more inclusive, so that it became more sustainable, Lagarde outlined three areas of work:

Unleashing the potential of women

India’s female labour force participation rate is currently at 33 per cent, much lower than the global average of 50 per cent and well below East Asia’s average of 63 percent. This means only 125 million of the 380 million working-age Indian women are currently part of the labour force. The challenge, therefore, is to increase the female labour force participation.

Pitching for changes in the current labour environment, Lagarde referred to an IMF study suggesting a number of legal and institutional barriers should be removed for facilitating the entry of women in the labour market. This, she argued, would also allow women to move from the informal sector, where they were largely employed, to the formal sector.

Increasing financial inclusion

Highlighting the importance of enhancing and the link between access to credit and economic opportunity outcomes, lagarde said financial inclusion could be a powerful agent for strong and inclusive growth.

Acknowledging the government’s recent steps to deepen financial inclusion, she said India could build on these steps and go further. She pitched for increasing small and medium enterprises’ (SMEs’) access to the formal financial system, to boost investment and job growth.

Investing in infrastructure

For manufacturing to take off in India, Lagarde stressed on the need for an open and competitive business environment to flourish, and the need for reliable and affordable sources of energy, transportation, and communication.

Highlighting the severe deficit the country faced, she said, while increasing public spending on infrastructure was a step in the right direction, more needed to be done to crowd in additional private investment.

Central to these, she said, was resolving issues with public-private partnerships in the infrastructure segment. Much more needed to be done on easing land acquisition, expediting clearances, and providing a stable regulatory regime that would encourage private investment, she said.

Commenting on the state of the global economy, Lagarde said, though growth remained rather subdued in much of the developed world, except the and the UK, there were “pick-up signs”. She said growth also appeared to be slowing in emerging economies like China, and Brazil, though for different reasons.

Lagarde outlined three significant risks to the fragile global recovery.

The first stems from the divergent monetary policies adopted by central banks across the developed world. This is likely to result in excessive volatility in financial markets, something from which India might not be shielded.

The second risk comes from the euro area and Japan remaining mired in “low growth-low inflation” environment for a prolonged period. This, she argued, was bound to negatively affect employment levels and reduce the ability to repay both public and private debt.

The third risk comes from a “triple hit” — a combination of appreciating dollar, higher global interest rates and volatile capital flows — which could hit emerging economies.

Source: Business Standard