‘Increasingly gloomy developments’: IMF slashes India's 2022 growth forecast to 7.4%

News Network
July 26, 2022

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Washington, July 26: The International Monetary Fund (IMF) on Tuesday slashed its annual growth projection for India by 0.8 percentage points to 7.4 per cent for 2022 and forecast "increasingly gloomy developments" for the global economy such as high inflation, downturn in China because of Covid-19 and spillovers from the war in Ukraine.

The fund cut its 2023 projection for India also by 0.8 percentage points to 6.1 per cent. These revised forecasts are relative to those in the fund's April world outlook report.

The 2022 cut for India "reflects mainly less favorable external conditions and more rapid policy tightening", said the fund's World Economic Outlook Update, titled "Gloomy and More Uncertain".

The World Bank has also slashed its projections for India to 7.5 per cent from 8 per cent for 2022-23, blaming it on a surge in Covid-19 cases, related mobility restrictions and the war in Ukraine.

The IMF forecast for India was called "rational" by an official who spoke on background.

"Given the gloomy global outlook and inflation contagion, IMF's growth forecast for India moderating it down by 0.8 percentage point is rational. Indian economy seems to be far more resilient at this point in time as others like US and China are talking a bigger hit with the forecast cut down to 1.4 and 1.1 percentage points respectively," the official said.

"Further, IMF continues to project India's growth rate in 2022 as the fastest growing major economy with 7.4 per cent and only other country around this rate is Saudi Arabia with 7.6 per cent. Nearest to this ASEAN-5 at 5.3 per cent while China is way down to 3.3 per cent."

The IMF projected a rather grim outlook for the world at large, saying it was facing "increasingly gloomy developments in 2022 as risks (that it had warned in April) began to materialise".

And they are: higher inflation worldwide, specially in the US and major European economies, triggering a sharp tightening in global financial conditions; a sharper-than anticipated slowdown in China, reflecting Covid-19 outbreaks and lockdowns; and further negative cross-border effects from the war in Ukraine.

The IMF slashed its global growth forecast to 3.2 per cent for 2022 and 2.9 per cent in 2023, down from April estimates of 3.6 per cent for both years.

"The outlook has darkened significantly since April," IMF Chief Economist Pierre-Olivier Gourinchas said in a statement. "The world may soon be teetering on the edge of a global recession, only two years after the last one."

The report acknowledged that though it had warned of inflation, it had not expected it to go so high. At 9.1 per cent for both, inflation has been the highest for the US and the UK in 40 years and at 9.8 per cent in the euro area, it's the highest since the inception of the unified monetary system; and, the report said, emerging and developing economies are also expected to be experiencing inflation at the rate of 9.8 per cent.

With wages not keeping pace in both advanced and emerging markets and developing economies, the report shows that household purchasing power will be eroded.

In China, ongoing Covid-19 outbreaks and mobility restrictions have "disrupted economic activity widely and severely", the fund said, and slowdown in China "has global consequences".

It added: "Lockdowns added to global supply chain disruptions and the decline in domestic spending are reducing demand for goods and services from China's trade partners."

The continuing war in Ukraine is causing "widespread hardship", the report said, detailing the disruptive and debilitating effect it's having on life -- 9 million Ukrainians fleeing the country, for instance -- and economy with existing sanctions on Russia and those coming on its energy export to Europe. 

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News Network
January 14,2025

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New Delhi: Social media giant Meta is set to get a summons from a Parliamentary Standing Committee over its boss Mark Zuckerberg's remark on the 2024 Indian general election. Nishikant Dubey, BJP MP and chairman of the House panel on Communication and Information Technology, said Meta would be summoned on grounds of spreading misinformation.

"Misinformation on a democratic country maligns its image. The organisation would have to apologise to the Parliament and the people here for this mistake," Mr Dubey said in a post on X.

In a podcast on January 10, the 40-year-old Facebook co-founder said the Covid pandemic had led to an erosion of trust in incumbent governments the world over. He incorrectly cited India's example in this connection. "2024 was a very big election year around the world and all these countries, India, had elections. The incumbents basically lost every single one. There is some sort of a global phenomenon - whether it was because of inflation or the economic policies to deal with Covid or just how the governments dealt with Covid. It seems to have had this effect that's global," he said.

Soon after, Union Minister Ashwini Vaishnaw fact-checked Zuckerberg's remark and said the people of India had reaffirmed their trust in the NDA led by Prime Minister Narendra Modi in the Lok Sabha election held last year.

"As the world's largest democracy, India conducted the 2024 elections with over 640 million voters. People of India reaffirmed their trust in NDA led by PM @narendramodi Ji's leadership. Mr. Zuckerberg's claim that most incumbent governments, including India in 2024 elections, lost post-COVID is factually incorrect," Mr Vaishnaw, who handles portfolios of Railways, Information and Broadcasting and Electronics and Information Technology in the Modi 3.0 government, said in a post on X.

"From free food for 800 million, 2.2 billion free vaccines, and aid to nations worldwide during COVID, to leading India as the fastest-growing major economy, PM Modi's decisive 3rd-term victory is a testament to good governance and public trust. Meta, it's disappointing to see misinformation from Mr. Zuckerberg himself. Let's uphold facts and credibility," he added.

The ruling BJP, which had scored thumping victories in the 2014 and 2019 Lok Sabha polls, suffered some setbacks in the general election last year and ended below the majority mark. The NDA alliance, however, crossed the magic figure comfortably with key allies bolstering the BJP's numbers. A united Opposition led by the Congress did make gains, but fell well short of the numbers required to turn the tables. With Modi 3.0, Prime Minister Modi became only the second Indian Prime Minister after Jawaharlal Nehru to get the top post for three consecutive terms.

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News Network
January 15,2025

The US consulate in Bengaluru will hold its ‘site-dedication ceremony’ on January 17, with officials confirming that the location of the upcoming consulate will be disclosed during the event. Sources indicate that the site could be in either the Central Business District or Whitefield.

While the consulate building is under development, visa services may temporarily begin at the JW Marriott hotel, which currently houses the United States Commercial Service (USCS) office.

Bengaluru has long advocated for the establishment of a US consulate, and with its opening, residents of the city and Karnataka will no longer need to travel to other states for their US visa applications.

It was in January of the previous year that External Affairs Minister S. Jaishankar, during his visit to Bengaluru, expressed his intention to urge the US Ambassador to India to establish a consulate in the city. This move follows the announcement during Prime Minister Modi’s June 2023 visit to the US, where it was revealed that two new US consulates would open in Bengaluru and Ahmedabad, and India would set up a mission in Seattle.

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News Network
January 8,2025

Mangaluru: Air India Express (AIE) has postponed its much-anticipated direct flight service between Mangaluru International Airport (MIA) and Singapore, citing low bookings. Passengers who had booked tickets for the inaugural flight scheduled for January 21 and subsequent dates have been notified of the cancellation through email.

In its email, AIE assured passengers of alternative travel arrangements, including connecting flight options between MIA and Singapore. However, the decision to delay the direct service has left travelers and travel agents disappointed.

An AIE official attributed the postponement to operational challenges but clarified that the airline has not abandoned plans for the route. “We are committed to starting the service, but there is no immediate confirmation on the new launch date,” the official stated. He further explained that sustaining a route requires consistent demand, and seasonal travel alone is insufficient to justify operations.

Another AIE representative admitted that the number of bookings for the inaugural flight was below expectations but declined to disclose specific figures.

Rajesh H Acharya, director of HQ Connections Pte Ltd in Singapore and coordinator of the Singapore Tuluver community, expressed his disappointment. Acharya, who has been advocating for a direct flight between Mangaluru and Singapore since 2017, said, “After years of effort, we finally convinced the airline to start this service, but it has now been deferred.”

Taking to X (formerly Twitter), Acharya posted: "Did not expect such behavior from @AirIndiaX, now owned by @TataCompanies & @SIAirlines. If there are issues, travelers deserve to be informed well in advance. This decision needs investigation at the highest level."

The delay has raised questions among the travel community, with many hoping the airline will address these concerns and provide a clear timeline for the launch of the Mangaluru-Singapore direct flight.

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