The government is moving ahead with the Air India strategic sale and is expected to ask suitors to bid based on the combined equity and debt value, while turning down suggestions to either run the operations for the next two-three years or shut down the national carrier. A panel of officers is also not in favour of reducing the debt by £2.3 billion. While the final modalities have to be prepared by the core group on disinvestment headed by cabinet secretary Rajiv Gauba, before a green-light from a ministerial panel, the groundwork is done by the inter-ministerial group (IMG). Top government sources indicated that the finance ministry is keen on department of investment and public asset management (DIPAM) moving ahead with the disinvestment programme of public sector companies in line with the Cabinet decision. Fresh proposals are unlikely to be taken up immediately, they said.
FY21 GDP to see sharper 10.3% fall: IMF
India’s economy is forecast to contract by 10.3% in 2020-21, sharper than the previous estimate of 4.5% decline as the impact of the Covid-induced lockdown hurts expansion, the International Monetary Fund (IMF) said. In its update to the World Economic Outlook (WEO), the IMF expects the Indian economy to rebound and grow by 8.8% in 2021-22, stronger than the 6% expansion predicted earlier. IMF is the latest to project a sharp contraction for Asia’s third-largest economy. The World Bank expects the economy to decline by 9.6%, while the RBI forecast GDP to plunge 9.5% in 2020-21, but estimates growth to be back in the fourth quarter. “Revisions to the forecast are particularly large for India, where GDP contracted much more severely than expected in the second quarter,” the IMF said. The US economy is projected to contract by 4.3%, before growing at 3.1% in 2021. China is the only economy that is forecast to grow 1.9% in 2020-21 and is expected to rebound to 8.8% next year.
Wholesale inflation at 7-month high
Inflation based on the wholesale price index (WPI) accelerated to a seven-month high in September on the back of hardening food prices, including potatoes and vegetables, prompting economists to say that the RBI is likely to maintain an extended pause on interest rates. Data released by the commerce and industry ministry showed wholesale price-based inflation rose an annual 1.3% in September, compared to 0.3% in the year-ago month and 0.2% in the previous month. Food inflation shot up to an eight-month high of 8.2% in September. The rise in potato prices was the highest since the 2011-12 series. The sharp increase was attributed by economists to crop loss, owing to heavy rains in parts of the country, reduced sowing area, supply of inferior quality seeds and inadequate stocks.
