04/02/2025

BIZ & FINANCE TUESDAY | FEB 4, 2025

18

India budget opts for economic sugar rush

Thai economy may underperform: Central bank chief BANGKOK: Thailand’s economic growth may falter at under 2.9% this year on the back of a weaker-than-expected fourth quarter where consumption cratered despite a government cash handout aimed up firing up sluggish growth, the central bank chief said. The Bank of Thailand previously anticipated that the economy could expand by 2.9% this year, lower than Finance Ministry projection of 3% growth. “I have to say that there is some downside risk to that figure,” governor Sethaput Suthiwartnarueput told Reuters in an interview. He said the economy may have expanded close to 2.7% in 2024, with the final-quarter pace weaker than forecast, at north of 3%. “The impact of the handouts and the stimulus was less than we had expected. “The handouts that went out sometimes were used to pay down debt and whatnot, so you didn’t see that translation into consumption.” Sethaput’s remarks were his first this year on the economic growth outlook and the effectiveness of the government’s vaunted $14 billion handout policy. Thailand’s government is set to roll out the third phase of its signature “digital wallet” programme in April, aiming to spur “very high” growth in the first quarter. The scheme, the ruling party’s core election campaign policy, was launched last September after repeated delays. The BOT’s monetary policy stance remains broadly neutral and inflation will rise to cross to hit 1.1% this year, remaining in the target band of 1% to 3%, but the central bank remains concerned about the volatility of the baht, Sethaput said. “We feel that at present, when you take it all together, the current policy rate is appropriate for striking the right balance for those things. “That said, if things change, right, we’re prepared to change.” Last month, the central bank left its key interest rate unchanged at 2.25%. – Reuters Reliance brings Shein back to India MUMBAI: Reliance Retail has launched an app in India to sell fashionwear from China’s Shein under a licensing deal, almost five years since Shein’s app was banned in the country after getting caught up in a diplomatic tussle. The Shein India Fast Fashion app represents a departure from Reliance’s strategy of adding brands to its flagship fashion app Ajio – whose offering includes Superdry and Gap – as it competes with rivals such as Myntra from Walmart’s Flipkart. Shein, founded in China in 2012 and later headquartered in Singapore, offers a vast selection of low-priced Western clothes. Its app was banned in India in 2020 alongside other Chinese apps such as ByteDance’s TikTok due to data security concerns, after a border dispute soured Indo-Chinese relations. Last year, India’s government disclosed to Parliament that Reliance had entered an agreement with Shein under which Indian manufacturers would supply products under the Shein brand. It did not make any other details public. “The fashion OG (original) is back,” said a message displayed upon opening the app. Deliveries will initially be limited to a few cities including New Delhi and Mumbai and expanded nationwide soon, it said. Reliance, owned by billionaire Mukesh Ambani, will pay a licence fee for using Shein’s brand name, said the person with direct knowledge of the matter. There is no equity investment in the partnership, the person said. – Reuters

MUMBAI: budget announcement was a bigger deal than usual this year: As the first full budget of Prime Minister Narendra Modi’s third term, it will set the tone for how the world’s fifth-largest economy confronts slowing growth and sagging markets. But the year’s top economic policy event opted mainly for short-term economic relief through middle-class tax cuts, while passing up a chance to go big on reforms needed to reignite rapid growth – once the envy of the world at more than 8%. The budget also scaled back the government’s emphasis on capital spending and infrastructure, another key driver for India’s growth ambitions since the pandemic. Without a strategy to regain high growth rates and assure jobs for India’s young population, the budget disappointed analysts and markets, alarmed in recent months by o Analysts disappointed by lack of growth strategy and reforms India’s annual

weak earnings growth and an exodus of foreign investors. “India is aspiring for 8% growth but we don’t have a path to 8% – a growth strategy is not there,” said Madhavi Arora, chief economist at Emkay Global Financial Services. The government has forecast India’s GDP growth will slip to a four-year low of 6.4% in the current financial year to March 31 and stay close to that level next year as well, compared with 8.2% in 2023-24. While the latest tax cuts may help urban consumers, who took some steam out of the economy as weak wage growth and high living costs curtailed their spending habits, economists see deeper problems that need to be addressed. “Eight per cent will require far deeper interventions in agricultural markets, human capital and ease of doing business,” said Dhiraj Nim, an economist at ANZ Research. Modi, who returned to power in July of last year with a weaker-than-expected mandate, has turned to appeasing politically important constituencies in the months since the election, analysts said. His Bharatiya Janata Party has reversed agricultural trade policies to favour farmers, offered cash handouts to women and,

now, cut taxes for the middle class. Analysts noted that this is not the first time, however, that Modi and his party failed to push economic reforms, which also got brushed aside in his previous two terms when the party had won more decisively and had greater political capital. “In 2019, the BJP got more than 300 seats and had a window (for reforms),” said Amit Ranjan, research fellow at Institute of South Asian Studies (ISAS), National University of Singapore. “But the government gave in to the needs of electoral politics as the government knows reforms do not immediately benefit the large section of voters.” In 2015, Modi let lapse an executive order making it easier for businesses to buy land, after failing to win support from opposition parties in the parliament. And in 2020, both houses of Parliament approved new labour codes, but they have yet to be implemented across all states. Plans for large-scale privatisations of state-owned enterprises, aiming to reinvigorate them by reducing government involvement, have also faltered, with the government now opting to put fresh funds into ailing state firms. – Reuters

India’s Finance Minister Nirmala Sitharaman posing for a photograph as she leaves the ministry of finance to present the annual budget at the parliament. – AFPPIC

Indonesia produces record 836m metric tons of coal in 2024 JAKARTA: Indonesia produced a record 836 million metric tons of coal in 2024, nearly 18% above its target of 710 million tons, Energy and Mineral Resources Minister Bahlil Lahadalia said yesterday. The figure beat 2023 output of 775 million tons, the previous record. In 2025, Indonesia targets to produce 735 million tons of coal, senior ministry official Tri Winarno said. The country’s actual production often surpass its annual targets. ministry, based on a few global coal prices, and is used to calculate royalty fees for miners. “The HBA is planned to be used as minimum price for transactions,”Tri said.

Meanwhile, the energy minister told reporters Indonesia would also consider using the domestic coal benchmark price, known locally as HBA, for global transactions, due to the gap between domestic and international prices. “Our nation must be sovereign in setting our commodity prices ourselves,” he said. The HBA is currently set monthly by the

Meanwhile, the ministry targets nickel ore output of 220 million tons this year, Tri said, but stopped short from disclosing the production quota that has been approved by the ministry. Last month, nickel miners association APNI told MPs that the ministry has approved a production quota for nearly 300 million wet metric tons for this year. – Reuters

Indonesia also set a record for exports, shipping about 555 million tons of coal last year, the ministry data showed. Indonesia is the world’s largest exporter of thermal coal.