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India has potential for very rapid economic growth, says Bill Gates

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India has the potential for “very rapid” economic growth over the next decade which will lift people out of poverty and allow the government to invest in health and education priorities in an “exciting way”, billionaire philanthropist and Microsoft co-founder Bill Gates has said.

In an exclusive interview to PTI, Gates, the world’s richest person, specifically complimented India’s Aadhaar identity system and the country’s performance in the financial services and pharma sectors.

The positive outlook by Gates for the Indian economy, Asia’s third largest, comes at a time when it is reeling under major slowdown amid apprehensions that the cycle may last for a longer period.

“I don’t have any knowledge about the near term, but I’d say over the next decade, there’s potential for very rapid growth, which will lift people out of poverty and allow the government to invest in health and education priorities in a really exciting way,” he said.

On Friday, 64-year-old Gates, with a net worth of USD 110 billion, regained the position of the world’s richest person surpassing the Amazon Inc’s Jeff Bezos. The Microsoft co-founder has so far donated over USD 35 billion to the Bill and Melinda Gates Foundation for poverty reduction and social development programmes in various countries.

“… Everybody hopes that there’s really good growth because the potential is certainly there for India to have high growth,” he said.

Gates is currently on a three-day visit to India to review the work of his foundation in the country.

India’s economic growth slumped to an over six-year low of 5 per cent in the first quarter ending June this fiscal due to slower consumer demand and private investment.

The slump in growth has prompted many global agencies to cut India’s GDP growth by various degrees for 2019-20.

Gates also hailed India’s Aadhaar identification system as well as adoption of the UPI system.

“Well, in all of our areas, India’s been a key place where we find innovators and financial services. It’s fantastic the way that the Aadhaar identity system and the overall UPI system is gaining adoption, and there’s some great lessons out of that work,” he said. “We partner with people like Nandan Nilekani to think, okay, how do the lessons from India apply to other countries for things like digital identity or financial services,” he said.

Gates also complimented India’s pioneering work in vaccine manufacturing, saying the country has made impactful contribution in improving peoples’ lives.

“When people think of India, they think of the IT services and the great work done there. Less visible but certainly very impactful for improving the human condition is the great work done by the vaccine manufacturers, whether it’s Serum, who’s the largest, but a dozen others – Bharat Biotech, Bio-E, a number of companies,” he said.

In the last one decade, the Bill and Melinda Gates Foundation has been working in areas of health-care, sanitation, agriculture and financial services for the underprivileged people in India.

The foundation’s partnerships with Indian manufacturers have led to development of affordable efficacious vaccines which has enabled different countries to introduce these vaccines, said an official of the foundation.

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Business

Reliance profit rises on BP deal gain; revenue slides 44% on oil hit

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Reliance Industries Ltd’s <RELI.NS> June-quarter profit jumped 31%, as the Indian conglomerate booked a substantial one-time gain from global oil major BP’s <BP.L> investment in its fuel retail business.

Reliance, led by Asia’s richest man Mukesh Ambani, said on Thursday its consolidated profit rose to 132.33 billion rupees ($1.77 billion) in the three months to June 30, from 101.04 billion rupees a year earlier.

Analysts on average had expected 74.57 billion rupees, according to Refinitiv data. It was not immediately clear if the figures were comparable.

Reliance booked a one-time gain of 49.66 billion rupees ($663 million) during the quarter, reflecting BP’s deal to forge a fuel retailing joint venture with the Mumbai-headquartered firm last year.

However, revenue from operations at India’s largest company by market value slumped nearly 44% to 912.38 billion rupees, hurt by losses in the company’s oil refining business as coronavirus lockdowns slammed global energy demand.

Revenue from the refining unit fell 54%, said Reliance, which operates the world’s biggest oil refining complex.

Still, its Jio telecom unit – India’s biggest by subscribers – continued to remain a bright spot as revenue from the business jumped 33.7% during the quarter.

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Economy showing signs of getting back to normalcy, but medium term outlook still uncertain: RBI Guv

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India’s economy is showing signs of getting back to normalcy, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Saturday.

Delivering a keynote address at the 7th SBI Banking and Economics Conclave, Das said, “Despite the substantial impact of pandemic in our daily lives, the financial system of the country, including all the payment systems and financial markets, are functioning without any hindrance”.

“The Indian economy has started showing signs of getting back to normalcy in response to the staggered easing of restrictions,” he said.

He added that COVID-19 pandemic perhaps represents so far the biggest test of robustness and resilience of our economic and financial system.

The RBI chief, however, noted that medium term outlook still remains uncertain. He cautioned that it is still uncertain when supply chains will be restored fully, how long will it take for demand conditions to normalise and what kind of durable effects the pandemic will leave behind on India’s potential growth.

“COVID-19 is the worst health and economic crisis in the last 100 years with unprecedented negative consequences for output, jobs and well being. It dented the existing world order, global value chains, labour and capital movements across the globe,” Das noted.

Elaborating on moves taken by the RBI till the pandemic struck, Das said, “From February 2019 onward, on a cumulative basis, we had cut the repo rate by 135 basis points till the onset of COVID-19. That was done mainly to tackle the slowdown in growth which was visible at that time”.

The lagged impact of these measures was about to propel a cyclical turnaround in economic activity, the RBI chief said, when COVID-19 brought with it calamities, miseries, endangering of lives and livelihood of people.

He further elaborated that a multi-pronged approach adopted by the Reserve Bank has provided a cushion from the immediate impact of the pandemic on banks.

“Policy action for the medium-term would require a careful assessment of how the crisis unfolds. Building buffers and raising capital will be crucial not only to ensure credit flow but also to build resilience in the financial system.”

According to Shaktikanta Das, the RBI has asked financial institutions to carry out a COVID stress test to see weaknesses in their balance sheet.

“We have recently advised all banks, non-deposit taking NBFCs and all deposit-taking NBFCs to assess the impact of COVID-19 on their balance sheet, asset quality, liquidity, profitability and capital adequacy for the financial year 2020-21.

“Based on the outcome of such stress testing, banks and non-banking financial companies have been advised to work out possible mitigating measures, including capital planning, capital raising, and contingency liquidity planning, among others. The idea is to ensure continued credit supply to different sectors of the economy and maintain financial stability,” Das said.

Besides, he cited that RBI has strengthened its offsite surveillance mechanism to proactively find weak institutes and to immediately take corrective steps.

“As the lock-down has obstructed our on-site supervisory examination to an extent, we are further enhancing our off-site surveillance mechanism. The objective of the off-site surveillance system would be to ‘smell the distress’, if any, and be able to initiate pre-emptive actions.”

“This requires use of market intelligence inputs and on-going engage ments with financial institutions on potential vulnerabilities. The off-site assessment framework, which takes into account macro and micro variables, i s more analytical and forward looking and aimed at identifying vulnerable se ctors, borrowers as well as supervised entities,” he said.

Furthermore, he said the supervisory approach of the Reserve Bank is to further strengthen its focus on developing financial institutions’ ability to identify, measure, and mitigate the risks.

“The new supervisory approach will be two-pronged – first, strengthening the internal defences of the supervised entities; and second, greater focus on identifying the early warning signals and initiate corrective action,” Das said.

He cited that to strengthen the internal defences, higher emphasis is now be ing given on causes of weaknesses than on symptoms.

“The symptoms of weak banks are usually poor asset quality, lack of profitability, loss of capital, excessive leverage, excessive risk exposure, poor conduct, and liquidity concerns. These different symptoms often emerge together,” he said.

“The causes of weak financial institutions can usually be traced to one or more of the following conditions: inappropriate business model, given the business environment; poor or inappropriate governance and assurance functions; poor decision making by senior management; and misalignment of intern al incentive structures with external stakeholder interests.”

Accordingly, he said RBI is placing special emphasis on the assessment of business model, governance and assurance functions, as these have been the are as of heightened supervisory concern.

“Supervised entities generally tend to focus more on business aspect seven to the detriment of governance aspects and assurance functions. There was also an apparent disconnect between their articulated business strategy and actual business operations. The thrust of the approach, therefore is, to improve the risk, compliance, and governance culture amongst the financial institutions,” he said.

In addition, he said that post the containment of Coronavirus, “a very careful trajectory has to be followed in orderly unwinding of counter-cyclical regulatory measures and the financial sector should return to normal function ing without relying on the regulatory relaxations as the new norm”.

“The Reserve Bank is making continuous assessment of the changing trajectory of financial stability risks and upgrading its own supervisory framework to ensure that financial stability is preserved,” he said.

“Banks and financial intermediaries have to be ever vigilant and substantially upgrade their capabilities with respect to governance, assurance functions and risk culture.”

Meanwhile, in his keynote address, the RBI governor said that the MPC has decided to cumulatively slash the policy repo rate further by 115 basis points.

With this, from February 2019, the total rate cut that the RBI has undertaken would be 250 basis points.

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Coca-Cola India, CSC sign MoU to boost its rural outreach

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One of the popular beverage maker Coca-Cola on Wednesday announced it has joined hands with Common Services Centers (CSCs) programme under Ministry of Electronics and Information Technology, to list its products on the latter’s Grameen e-Store platform.

“CSC and Coca-Cola’s partnership serves the dual purpose of providing last mile connectivity of essential and affordable hydration to citizens’ doorsteps, as well as promoting rural entrepreneurship and building livelihoods by mapping supply points to Village Level Entrepreneurs (VLEs),” a statement issued by the company said.

In the pilot phase, Coca-Cola’s portfolio of products will be listed on Grameen eStore, a hyper-local rural e-commerce platform, across the states of Andhra Pradesh, Telangana, Tamil Nadu, Uttar Pradesh and Haryana, it added.

CSC SPV CEO Dinesh Tyagi said, “Through this initiative, VLEs are playing a critical role in connecting producers and companies with the rural consumers right at their doorsteps. The partnership with Coca Cola will allow the stores to diversify their offerings while providing customers access to new products. It will be a win-win proposition.”

Commenting on the partnership, Coca-Cola India and Southwest Asia President T Krishnakumar said, “This initiative will help us with last mile connectivity to ensure people are hydrated and have their relevant choice of beverages. It underscores our long-term commitment towards creating a sustainable business in India through responsible actions and shared growth.”

He further said the company has adopted a hyperlocal strategy focused on strengthening the regional connect, both in terms of choice and reach.

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