Business & Economy Current Affairs 2017

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India ranks 60th in Inclusive Development Index

India ranked 60th among the 79 developing countries in 2017 Inclusive Development Index (IDI) released in World Economic Forum’s (WEF) ‘Inclusive Growth and Development Report’.

The index is based on 12 performance indicators and countries are ranked on IDI scores based on a scale of 1-7. It has three pillars Growth and Development, Inclusion and Intergenerational Equity, and Sustainability in order to provide a more complete measure of economic development than GDP growth alone.

Key Highlights of 2017 IDI
  • Top 10 developing economies in 2017 IDI: Lithuania (1st), Azerbaijan (2nd), Hungary (3rd), Poland (4th), Romania (5th), Uruguay (6th), Latvia (7th), Panama (8th), Costa Rica (9th) and Chile (10th).
  • Top 10 advance economies in 2017 IDI: Norway (1st), Luxembourg (2nd), Switzerland (3th), Iceland (4th) and Denmark (5th), (6th), Netherlands (7th), Australia (8th), New Zealand (9th) and Austria (10th).
  • BRIC’s countries: Russia (13th), China (30th) and Brazil (30th).
  • India’s neighbours: India’s many of the neighbouring nations are ahead in the rankings. China (15th), Nepal (27th), Bangladesh (36th) and Pakistan (52nd).
  • India, with a score of only 3.38, ranks low among 79 developing economies, despite its growth in GDP per capita is among the top 10 and labour productivity growth has been strong.
  • India scores well in terms of access to finance for business development and real economy investment.
  • Reasons for India’s lower rank: India’s debt-to-GDP ratio is high, that raises some questions about the sustainability of government spending.
  • India’s labour force participation rate is low, informal economy is large and many workers are vulnerable to employment situations with little room for social mobility.
  • India needs more progressive tax system to raise capital for expenditures in infrastructure, health care, basic services and education,

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IMF cuts India’s FY17 growth rate to 6.6% from 7.6%  

The World Economic Outlook (WEO) update released by the International Monetary Fund (IMF) has cut India’s growth rate for the fiscal year 2016–17 to 6.6% from its previous estimate of 7.6%.

India’s growth rate was cut due to the temporary negative consumption shock of demonetisation. It has dampen India’s growth by 1% point in the FY2017 and 0.4% point in FY2018, compared with IMF’s earlier projections.

Key highlights of IMF’s Outlook
  • Global economic activity will pick up pace in FY17 and FY18, especially in emerging markets and developing economies. Global growth is forecast at 3.4% in FY17 against 3.1% in FY16.
  • There is marginal upward shift in prospects for the US and China until 2018 but India, Mexico and Brazil are among the large economies that have had their projections revised downwards.
  • For China, the growth forecast for FY 2017 was revised upwards, to 6.5%, 0.3% point above the October 2016 forecast. In 2018, China’s growth rate is projected to be 6% against India’s 7.7%.
  • The recent election of Donald Trump as US President could have a positive impact on US economy, but extent of it could not be gauged immediately.
  • The stimulus policies expected and already underway in US and China will hold world economy from further slowdown and result in rise of global growth.
  • India’s Demonetisation move led to shortage of currency causing a slump in demand and widespread job losses dampening growth.
  • Other Asian countries such as Thailand and Indonesia will also face headwinds in medium term.

IMF forecast

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Richest 1% own 58% of total wealth in India: Oxfam Study

According to study conducted by rights group Oxfam, India’s richest 1% now hold a huge 58% of the country’s total wealth, indicating rise income inequality. It is higher than the global figure of about 50%.

It shows that 57 billionaires in India now have same wealth ($216 billion) as that of the bottom 70% population of the country. Globally, just 8 billionaires have the wealth as the poorest 50 % of the world population.

Key Findings of Study
  • The total global wealth in the year 2016 was $255.7 trillion of which about $6.5 trillion was held by billionaires, led by Bill Gates ($75 billion), Amancio Ortega ($67 billion) and Warren Buffett($60.8 billion).
  • Globally, just 8 billionaires have the same amount of wealth as the poorest 50% of the world population.
  • Since 2015, richest 1 % owned more wealth than the rest of the planet. Over the next 20 years, 500 people will hand over $ 2.1 trillion to their heirs (a sum larger than GDP of India, a country of 1.3 billion people).
  • Over the last two decades, richest 10% of the populations in China, Laos, Indonesia, India, Bangladesh and Sri Lanka have seen their share of income increase by more than 15%.
  • Poorest Sections: The poorest half of world has less wealth than had been previously thought. The poorest 10% have seen their share of income fall by more than 15%.
  • Solution: It calls to build a human economy that benefits everyone not just the privileged few.
  • In India, there are 84 billionaires with a collective wealth of $248 billion led by Mukesh Ambani ($19.3 billion), Dilip Shanghvi ($16.7 billion) and Azim Premji ($15 billion).
  • Gender pay gap: India suffers from huge gender pay gap. It has among the worst levels of gender wage disparity (men earning more than women in similar jobs) and the gap exceeding 30%.
  • In India, women form 60% of the lowest paid wage labour but only 15% of the highest wage–earners. Thus, India women are poorly represented in top bracket of wage–earners and experience wide gender pay gap at the bottom.
  • Indian government must introduce inheritance tax and increase wealth tax as the proportion of this tax in total tax revenue is one of the lowest in India to end the extreme concentration of wealth and to end poverty.

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