In this installment of TransferGo’s regular series of news and events from India, we look at the World Bank’s view on the country’s GDP, possible pesticide poisonings, the growth of digital payments and a somewhat bleak employment forecast.
Slowdown in India’s economic growth an “aberration”
For the April-June period India’s GDP grew by 5.7% on a year-on-year basis; GDP growth for the previous period (January-March) was 6.1%. For the same quarter in 2016 GDP growth was at 7.9%. The GDP growth rate for the same quarter last year was 7.9%.
During a conference call with reporters prior to the International Monetary Fund’s annual meeting, World Bank President Jim Yong Kim called the slowdown an “aberration” and gave an overall optimistic forecast for the country’s economy.
According to Kim the GST (Goods and Services Tax) will have a very positive impact. Kim told reporters “there’s been a deceleration in the first quarter, but we think that’s mostly due to temporary disruptions in preparation for the GST, which by the way is going to have a hugely positive impact on the economy.” He added: “we think that the recent slowdown is an aberration which will correct in the coming months and the GDP growth will stabilise during the year. We’ve been watching carefully, as Prime Minister (Narendra) Modi has really worked on improving the business environment and so, we think all of those efforts will pay off as well.”
Digital payment platforms continue to grow
India has a smartphone base of 300 million with another 20 million users being added each month. This massive base along with the demonetisation policy of 2016 has given rise to a rapid growth in digital payment solutions, particularly QR (quick response) codes.
The leading payment processor is Paytm, which uses QR codes via mobile devices. The Paytm logo along with the QR code can be found at tea stalls, vegetable carts, kirana stores and at smaller stores throughout the country.
The QR code is also emerging as a favourite in the government’s policy agenda for digital payments. Many analysts predict that utility bills and other invoices could possibly include a QR code in the future allowing the customer to scan the bill to make a payment instantly. The QR code works equally well in printed or electronic form.
Analysts also noted that digital payment platforms are in their infancy and predict exponential growth over the next few years.
Pesticide poisoning suspected in death of 50 farmers
The government of Maharashtra is ordering a probe into the possibly that pesticide poisoning is the cause of at least 50 deaths in the area. The Yavatmal district is one of the hardest-hit areas.
In the past few months over 800 farmers, predominately cotton farmers, have been admitted to hospital. Farmers in the area when interviewed by the BBC told reporters they use a potent mix of pesticides. Both liquid and power chemicals are used.
Even though farmers grow a genetically modified variety of cotton, which is designed to be resistant to bollworms, they report that the invasive insects are still present prompting an increase in pesticide use.
Noting the rise in illnesses and deaths among farmers, many farmers told BBC reporters that they are discontinuing the use of pesticides.
Some of the farmers and family members noted that instructions for the safe use of the pesticides, such as eye protection and wearing gloves had not been followed. They also wondered if something had changed, as failure to follow safety precautions was not a new phenomenon.
Employment growth sluggish
In his campaign of 2013 Narendra Modi told voters the BJP party would create 10 million jobs.
Economist Dr Vinoj Abraham states that based on his analysis of labour bureau data that employment growth slowed dramatically between 2012 and 2016. He also added that it is possible that for the first time in independent India’s history that existing jobs may have actually disappeared.
Dr Abraham states that farming jobs, which are the source of almost livelihood for about half of India’s population, are disappearing. He cites low prices and years of droughts as part of the reason for farm workers leaving the farms to seek jobs in manufacturing and construction.
A study by the McKinsey Global Institute supports Abraham’s theory, noting that between 2011 and 2015, the number of farm jobs decrease by 26 million. According to some, the future employment picture is somewhat bleak.
India Express noted that more than 120 companies in a diverse range of enterprises reported a decrease in hiring. One HR executive told the paper this “reflects upon the lack of expansion plans and near-term growth expectation of these companies”. The Economic Survey calls job creation India’s “central challenge”.
Over 12 million Indians will be entering the labour market every year until 2030. More than 26 million Indians are currently looking for regular work.
The TransferGo Blog publishes biweekly updates on India along with Brexit and Polish Updates. These series join our other regular “Doing Business With” series and our articles designed to assist our readers with finding a new home, finding the best mobile service, planning a wedding, discovering the best restaurants for particular types of food along with other informative articles.