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Addressing the 7th India Ideas Conclave in Bangalore on Sunday hosted by the India Foundation, at the panel Commerce & Industry 2.0. President of the USIBC Atul Keshap discussed India's impressive development, the success of government-led digitisation efforts, and the country's status as the fastest-growing large economy.

Digital economy trade is the goose that lays the golden eggs between both of our countries...My appeal to you would be that we make sure that we create the structures, and the regulations, and the legal framework to ensure the continued vitality and continued growth of the digital economy in the United States and India, Keshap, also a former top American diplomat, said.

There is a sweeping revolution happening in India, and it is going to have an enormous positive impact on India, on America, and on the entire world. After centuries of disruption, India is returning... to its historic stature as one of the largest and most dynamic and prosperous economies on earth, Keshap said.

The former State Department diplomat, who recently served as the Charg d'affaires of the US Embassy in India, was speaking on transformations in infrastructure, economic policy, and the digital economy among other areas.

The price of CNG has been hiked to Rs 78.17 per Kg in Noida, Greater Noida and Ghaziabad, in Gurugram, it will cost Rs 83.94 per Kg.

“We are tightening our belts and looking at reducing costs to deal with the situation,” IGL,MD,Sanjay Kumar told the media. The Limited availability of government-controlled gas has forced IGL to use more LNG to meet double-digit growth in CNG and PNG (piped natural gas) demand.

“Several factors determine CNG prices. One of them is price of natural gas from various sources, including LNG (gas imported in ships). Gas prices are expected to remain high in the foreseeable future because of the Russia-Ukraine conflict. That will impact retail CNG rates,” Kumar explained.

The gas company apprehends no relief for CNG owners in Delhi-NCR. This is mostly due to steep international prices of natural gas.

"LNG prices are still hovering around $20 per unit, which is double the normal rate. Prices will rise further if summer is unusually warm in the western hemisphere. Domestic gas prices too are expected to rise further in October." Kumar disclosed.

The price increase is likely to hit not just private vehicle owners but also auto drivers and commercial vehicle owners as their livelihood is affected.

The demand for global leisure as well as business flights are on the rise, thanks to the ebbing crisis of the Covid pandemic and various other factors, according to a study.

The report by Mastercard Economics Institute, Travel 2022: Trends & Transitions, found that cross-border travel has reached the pre-pandemic levels as of March 2022. This is a positive development for the industry since air travel has been dominated by domestic flights since the pandemic began in 2020.

Mastercard Economics Institute chief economist for Asia-Pacific, Middle East and Africa, David Mann predicted that a  “major recovery” is underway.

Short-haul and long-haul cross-border leisure travel both seem to have reached the pre-pandemic levels. In April, the number of short and medium-haul flights climbed 25 percent over that of April 2019. An unusually high demand in international flight bookings made the total number of long-haul flights in 2022 almost reach the pre-Covid levels. 

“It is just pure evidence of how strong the pent-up demand has actually been,” Mann said on the surge in flight bookings.

It is not just the wanderlust for travel enthusiasts, business flyers too are taking to the skies. Business flight bookings in March this year exceeded the number of 2019, according to the report,

Even as there’s an upward trend in flight bookings globally, a return to air travel has been sluggish in Asia. “Despite a delayed recovery compared to the West,” Mann said, “Travelers in Asia Pacific have demonstrated a strong desire to return to travel where there have been liberalisations.”

If flight bookings continue at their current pace, an estimated 1.5 billion more global passengers will fly this year than in 2021, the report from the Economics Institute estimated.

Despite what seem to be positive projections, there are risks surrounding the air travel industry’s recovery. “Among the numerous risks that could derail travel recovery... we would put Covid as the biggest swing factor,” said Mann.

As the Ukraine conflict impacts the global GDP, India is projected to grow by 6.4 per cent in 2022, slower than the last year's 8.8 per cent but still the fastest-growing major economy, with higher inflationary pressures and uneven recovery of the labour market curbing private consumption and investment, according to a UN report.

The UN Department of Economic and Social Affairs said in its World Economic Situation and Prospects (WESP) report released on Wednesday that the war in Ukraine has upended the fragile economic recovery from the pandemic, triggering a devastating humanitarian crisis in Europe, increasing food and commodity prices and globally exacerbating inflationary pressures.

The global economy is now projected to grow by only 3.1 per cent in 2022, down from the 4.0 per cent growth forecast released in January 2022. Global inflation is projected to increase to 6.7 per cent in 2022, twice the average of 2.9 per cent during 20102020, with sharp rises in food and energy prices, it said.

The report said that the outlook in South Asia has deteriorated in recent months, against the backdrop of the ongoing conflict in Ukraine, and higher commodity prices and potential negative spillover effects from monetary tightening in the United States. The regional economic output is projected to expand by 5.5 per cent in 2022, which is 0.4 percentage points lower than the forecast released in January.

India, the largest economy in the region, is expected to grow by 6.4 per cent in 2022, well below the 8.8 per cent growth in 2021, as higher inflationary pressures and uneven recovery of the labour market will curb private consumption and investment, it said. For the fiscal year 2023, India's growth is forecast to be 6 per cent.

Lead Author & Chief, Global Economic Monitoring Branch, Economic Analysis and Policy Division, United Nations Department of Economic and Social Affairs Hamid Rashid told reporters at the UN Headquarters that almost all regions in the world are affected by high inflation except for East Asia and South Asia. He said India in that sense is a little bit in a better position as it did not have to aggressively pursue monetary tightening compared to other countries in Latin America.

Brazil has raised interest rates repeatedly. India's projected growth for 2022 is 6.4 per cent, a downward adjustment of 0.3 per cent from January.

We expect Indian recovery to remain strong in the near term, in the next year and two, but again we cannot completely discount the downside risk that would come from external channels. So that risk is still there, he said. The report added that higher prices and shortages of farming inputs including fertilisers are likely to persist in the region, negatively impacting the agricultural sector in Bangladesh, India, Pakistan, and Sri Lanka.

This will probably result in weaker harvests and exert further upward pressures on food prices in the near term, the report said. It said along with higher energy prices, elevated prices of food will likely increase food insecurity across the region. Consumer price inflation in the region is expected to accelerate to 9.5 per cent in 2022, from 8.9 per cent in 2021.

The report also said that tighter external financial conditions will adversely affect regional growth prospects, especially for countries with high exposure to global capital markets facing debt distress or risks of debt default. The pandemic left many countries with large fiscal deficits and higher and unsustainable levels of public debt. Sri Lanka is currently facing a debt crisis and discussing a new IMF-supported programme to bring its economy out of the crisis, it said.

The downgrades in growth prospects are broad-based, including the world's largest economies the United States, China and the European Union and the majority of other developed and developing economies, it said. The growth prospects are weakening particularly in commodity-importing developing economies, driven by higher energy and food prices. The outlook is compounded by worsening food insecurity, especially in Africa, it added.

Growth forecasts for the United States, European Union and China have been revised downward, with the European Union registering the most significant downward revision.

The European Union economy most directly hit by disruptions in the energy supply from the Russian Federation is now expected to grow by 2.7 per cent in 2022, down from 3.9 per cent expected in January. The United States economy is expected to grow by 2.6 per cent in 2022 and 1.8 per cent next year, while China is expected to grow by 4.5 per cent in 2022 and 5.2 per cent in 2023. The developing countries, as a group, are projected to grow by 4.1 per cent in 2022, down from 6.7 per cent in 2021, the report said.

The war in Ukraine in all its dimensions is setting in motion a crisis that is also devastating global energy markets, disrupting financial systems and exacerbating extreme vulnerabilities for the developing world, UN Secretary-General Antonio Guterres said.

We need quick and decisive action to ensure a steady flow of food and energy in open markets, by lifting export restrictions, allocating surpluses and reserves to those who need them, and addressing food price increases to calm market volatility, he said.

Q1: The govt has deferred the plan to privatise public sector banks, as the legal amendments have not been made yet. Do you think privatisation of PSBs is an idea whose time has come? Do you think the RBI should relax criterion to allow corporates, especially those with experience in finance business to participate in the privatisation process?
Ans:
>India needs a larger, stronger, Atmanirbhar financial services sector

Prices of petrol and diesel have remained steady for more than 40 days now. Since the end of a four-and-a-half-month-long stop in rate revision on March 22, rates of petrol and diesel have increased by Rs 10 a litre each through 14 revisions. Fuel prices were last hiked on April 6 by 80 paise a litre each.

According to a price notification from fuel retailers, petrol in Delhi costs Rs 105.41 a litre and diesel Rs 96.67 a litre.

In Mumbai, petrol and diesel prices are at Rs 120.51 and Rs 104.77 respectively. In Chennai, petrol costs Rs 110.85 and diesel Rs 100.94 . In Kolkata, petrol is at Rs 115.12 and diesel Rs 99.83.

Oil manufacturing companies (OMCs) began to raise retail prices of the fuel from March 22. In March, the hike was Rs 6.40 a litre each and in April the hike was Rs 3.60 a litre each. In May, there has been no change in prices, so far.

India meets 80 percent of its oil needs through imports. Retail rates are adjusted according to the global movement in crude prices. OMCs adjust the rates of petrol and diesel every day, depending on the average price of benchmark fuel in the global market over the previous 15 days and foreign exchange rates.

It is at 6 am every day that changes in prices, if any, take effect. Check how petrol and diesel prices are calculated in India, and know how much of it is tax.

Oil prices rose more than $1 a barrel in early Asian trade on Wednesday on hopes of demand recovery in China as the country gradually eases some of its strict COVID-19 containment measures.

Brent crude futures were up $1.15, or 1.0 percent, at $113.08 a barrel at 0042 GMT, while United States West Texas Intermediate (WTI) crude futures climbed $1.62, or 1.4 percent, to $114.02 a barrel, paring some losses after oil prices fell by around 2 percent in the previous session.

Domestically, Indian Oil Corporation (IOC) hiked jet fuel prices by 5 percent to Rs 1.23 lakh/kl in Delhi on May 16.

Indraprastha Gas (IGL) hiked the price of Compressed Natural Gas (CNG) by Rs 2 a kg in Delhi-NCR on May 15. With the latest hike, CNG is now priced at Rs 73.61 a  kg in Delhi, Rs 76.17 a kg in Noida, and Rs 81.94 a kg in Gurugram.

The government on Monday disputed reports that the finance ministry had claimed that inflation hurts the rich more than the poor.

“A Tweet with the picture of Union Finance Minister @nsitharaman is being circulated claiming that the Finance Ministry has stated-'Inflation will affect the rich more than the poor in 2022.' The Claim is fake. @FinMinIndia has not given such statement,” the Press Information Bureau (PIB)’s fact check division posted on its Twitter account.

The monthly economic review for April published by the finance ministry last week said: “Seen over a longer time horizon, inflation in India’s economy has not been as much a challenge as is sensed from month-to-month changes. CPI Inflation during FY 2021-22 averaged 5.5 per cent, 50 basis points below the upper limit of the RBI MPC’s inflation band, and lower than 6.2 per cent for FY 2020-21. While inflation is expected to be elevated in 2022-23, mitigating action taken by the Government and RBI may reduce its duration. Evidence on consumption patterns further suggests that inflation in India has a lesser impact on low-income strata than on high-income groups.”

A query sent to the finance ministry spokesperson didn't elicit any response till press time.

Under the current mechanism, the Reserve Bank of India has been mandated by the government to maintain retail inflation at 4 per cent with a margin of 2 per cent on either side.

The claim and counterclaim over inflation come at a time when retail inflation rose to an eight-year high in April to 7.8 per cent, even as industrial growth continued to falter amid rising risks from the ongoing Russia-Ukraine war.

The data released by the National Statistical Office showed the food inflation rate in April spiralled to 8.38 per cent as prices of edible oil and vegetables shot up by 17.3 per cent and 15.4 per cent, respectively. Fuel inflation also breached the double-digit mark at 10.8 per cent in April over rising retail prices of petrol, diesel, and cooking gas even as crude oil prices softened compared to March.

Making a strong case for reduction in taxes on petrol and diesel, CII President Sanjiv Bajaj on Tuesday said it should be done in a collaborative manner between the Centre and states with a view to containing the rising inflation.

In an interview to PTI, he said taxes on petrol and diesel were increased by the government at a time when the price of crude oil in the international market was low and the same needed to be reversed.

"Very clearly one of our prime constituents of inflation is oil. We've seen the rise on the ground of oil prices resulting in petrol prices. We've seen the impact on inflation and this needs to be urgently addressed.

"We know taxation, both Centre and states, is very high and it is something which we have seen when oil prices fell, at that time rates were increased. Now that oil prices have gone up, we believe that there is a case for this to be discussed ...in a collaborative manner, because eventually we are doing this for one country," said Bajaj. The CII president also said the three contentious agri bills that were rolled back earlier "should be reviewed but in proper consultation and then taken forward".

Asked what impact the rollback of certain reforms in the past related to land acquisition and farm laws has on business sentiment in terms of policy stability especially on foreign investors eyeing India, Bajaj termed these as two different issues and said, with respect to foreign investors one should not do anything retrospectively.

"As far as farm laws and labour laws are concerned we believe that for this country to create its rightful position as a manufacturing hub for the world, we need modern labour laws. This requires the right kind of consultation and discussion with all stakeholders and we would at least support for the government to take this up in earnest, do it once more with the right consultations because we do believe it is important," he emphasized.

He argued that for the country's own food security, security of farmers, for ensuring streamlining of the number of steps from farm to fork, unnecessary intermediaries and their costs should be removed, and the agri bills also should be reviewed but in proper consultation and then taken forward.

On reports of High Networth Individuals (HNIs) leaving India, the CII president said, "We have to create over here an environment where India can prosper, Indian business can prosper. We don't then have to worry about a few people leaving".

He observed that people could have left due to many different reasons. "What we can do as a country is to create the right environment and as I said the current government has been doing that. To create the right environment where we attract business, we attract investment and that automatically should attract more and more people not only to not leave but to want to come to India," the CII president said.