Modi government releases India budget to get growth back up, plans structural reforms

Indian finance minister Nirmala Sitharaman said the country ‘needs to invest heavily in infrastructure’ after she presented the annual budget statement to parliament. (Reuters)
Updated 05 July 2019
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Modi government releases India budget to get growth back up, plans structural reforms

  • The government plans structural reforms to kickstart foreign and domestic investment
  • India Prime Minister Narendra Modi has set a target of growing India into a $5 trillion economy by 2024/2025

NEW DELHI: India Prime Minister Narendra Modi’s government unveiled the budget for 2019/2020 on Friday, seeking to reverse weakening growth and investment that threaten to take the shine off a recent landslide election victory.
Finance Minister Nirmala Sitharaman, presenting the annual budget statement to parliament, said the government planned structural reforms to kickstart foreign and domestic investment.
Modi has set a target of growing India into a $5 trillion economy by 2024/2025 from $2.7 trillion that a government report on Thursday said will be done on the back of higher investment, savings and exports in the way China’s growth was propelled.
“We need to invest heavily in infrastructure, digital economy, job creation,” Sitharaman said, adding India is set to become a $3 trillion economy in the current fiscal year.
But economists say scaling up Asia’s third largest economy in rapid fashion will need bold reforms including freeing up land and labor markets, which Modi shied away from in his first term for fear of political backlash.
Capital Economics said in a note on Friday that reaching that target “is dependent in large part on achieving real GDP growth of 8 percent a year, which we think is unlikely.”
Land and labor reforms are difficult in a democracy like India and it seems unlikely Modi will risk drawing the ire of his Bharatiya Janata Party voters that re-elected him with a huge mandate.
India’s economy is also running into global headwinds with growth weighed down by trade wars and protectionism.
Asia’s third largest economy grew at a much slower-than-expected 5.8 percent in the last quarter, the weakest growth in five years and far below the pace needed to generate jobs for the millions of young Indians entering the labor market each month. And the unemployment rate rose to a multi-year-high of 6.1 percent in the 2017/18 fiscal year.
New investments proposals in 2018/19 fell to 9.5 trillion rupees, the lowest investment proposals recorded in 14 years, according to Center for Monitoring Indian Economy, a Mumbai-based think tank.


Funds managing $2 trillion urge cement makers to act on climate impact

A general view of Gulf Cement Company in Ghalilah, Ras al Khaimah, United Arab Emirates July 16, 2019. (REUTERS)
Updated 25 min 46 sec ago
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Funds managing $2 trillion urge cement makers to act on climate impact

  • The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency, meaning that if it were a country, it would be the third largest emitter, behind the US and China

LONDON: European funds managing $2 trillion in assets called on cement companies to slash their greenhouse gas emissions on Monday, warning that a failure to do so could put their business models at risk.
Some asset managers are ramping up engagement with heavy polluters to demand a faster transition to a cleaner economy.
“The cement sector needs to dramatically reduce the contribution it makes to climate change,” said Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change, which has more than 170 members, mainly European pension funds and asset managers. “This is ultimately a business-critical issue for the sector,” Pfeifer said in a statement.
The group said investors had written to cement or construction materials companies including Ireland’s CRH, Franco-Swiss group LafargeHolcim and France’s St. Gobain to demand they achieve net zero carbon emissions by 2050.
They also noted that Germany’s HeidelbergCement had already adopted the target. The funds urged all cement companies to align themselves with the 2015 Paris agreement to combat global warming, engage with policymakers to ensure an orderly transition to a low carbon economy, and increase their reporting of climate risk.
“Construction materials companies may ultimately risk divestment and lack of access to capital as an increasing number of investors seek to exclude highly carbon-intensive sectors from their portfolios,” said Vincent Kaufmann, CEO of the Ethos Foundation.

FASTFACT

The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency.

Signatories collectively manage assets worth $2 trillion and include Aberdeen Standard Investments, BNP Paribas Asset Management, Sarasin & Partners and Hermes EOS.
Although funds are increasingly engaging with companies from airlines to carmakers on emissions, few are calling for the systemic transformation of the global economic system that scientists increasingly argue is needed to prevent runaway climate breakdown.
The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency, meaning that if it were a country, it would be the third largest emitter, behind the US and China.
With climate campaigners traditionally focused on fossil fuel companies, the European cement sector has received comparatively little scrutiny until recently.
On Tuesday, police arrested six climate activists from civil disobedience group Extinction Rebellion at a protest aimed at disrupting a site in east London belonging to London Concrete, a unit of LafargeHolcim.
In June last year, a report from think-tank Chatham House concluded that although there was no “silver bullet” to reduce emissions from cement, it should be possible to deploy a range of policies and technologies to achieve deep decarbonization.