India’s economy, once the world’s fastest-growing among large nations, slowed to a 4.7-percent annual growth rate in 2019’s fourth quarter.
The government’s hopes to speed that pace have now come down with the coronavirus.
“There’s no real sign of recovery,” said Shumita Deveshwar, chief Indian researcher at TS Lombard. Now the virus has put “a big cloud over India,” she added.
India’s economy is less dependent on China, which has helped India escape some of the virus’s worst consequences.
Most of the components India uses to make electronics and about 25 percent of its vehicle parts, however, originate in China.
TVS, an Indian motorcycle maker, cut production by 10 percent in February due to a lack of parts. RPG, an industrial conglomerate, says it has enough parts for many of its divisions to last through March, but it is struggling to find alternatives in case the supply lines stay shut longer than that.
“The most worrying aspect is that the latest numbers show little sign of the slowdown abating,” said Shilan Shah, senior economist at Capital Economics.
Ratings agency Fitch has cut its 2020 growth estimate for India from 5.1 percent to 4.9.
High Court Voids Ban on Digital Currencies
India’s supreme court has overturned an April 2018 order by the country’s central bank forbidding banks to do business with anyone involved with cryptocurrencies.
The court ruled that the order was too harsh and too broad.
The ban has stung the country’s economy and closed some of the more than 20 exchanges over which as many as five million Indians traded digital currencies.
“Striking the ban opens up financial institutions to crypto,” said Jayanth Kolla at Convergence Catalyst, a tech consulting firm. “It’s a huge precedent because India is a big country and big economy.”
Digital money still has foes in India. A government committee now has proposed a law that would jail anyone for up to 10 years for possessing cryptocurrencies.
Crypto foes worry that digital currencies leave investors vulnerable to fraud and can be used to fund terrorism and other illicit purposes.
Proponents, including the Internet and Mobile Association of India, argue that the government has over-reacted out of fear virtual money could weaken the rupee.
India’s effort to stifle cryptocurrencies ranks with China’s and Indonesia’s as among the world’s harshest.
