Gross domestic product (GDP) expanded an annual 7.3% in the first three months of 2018, the 24-29 May poll of 55 economists predicted, a touch faster than the 7.2% achieved in the last three Months of 2017—and well above China’s pace of 6.8% for the quarter ending in March 2018. Forecasts ranged from 6.9 to 7.7%. The Indian economy probably gained a little momentum in the first three months of 2018 which should ensure that it remains the world’s fastest growing major economy. If the poll is right, the January-March 2018 GDP growth figures would be the highest since demonetization in November 2016 and GST rollout in July 2017. The twin policy shocks disrupted the Indian economy, so much so that its growth fell to 5.7% in the April-June period of 2017.
Inflation is generally defined as the increase of prices of goods and services over a certain period of time, as opposed to deflation, which describes a decrease of these prices. Inflation is a significant economic indicator for a country. The inflation rate is the rate at which the general rise in the level of prices, goods and services in an economy occurs and how it affects the cost of living of those living in a particular country. It influences the interest rates paid on savings and mortgage rates but also has a bearing on levels of state pensions and benefits received.
The statistic shows the inflation rate in India from 2012 to 2018. The inflation rate is calculated using the price increase of a defined product basket. This product basket contains products and services, on which the average consumer spends money throughout the year. They include expenses for groceries, clothes, rent, power, telecommunications, recreational activities and raw materials (e.g. gas, oil), as well as federal fees and taxes. In 2018, the inflation rate in India was around 4.74 percent compared to the previous year.
India’s inflation rate has been on the rise over the last decade. However, it has been decreasing slightly since 2010. India’s economy, however, has been doing quite well, with its GDP increasing steadily for years, and its national debt decreasing. The budget balance in relation to GDP is not looking too good, with the state deficit amounting to more than 9 percent of GDP.
Financial year 2017-18 witnessed some major reforms. The implementation of Goods and Services Tax (GST) in mid-2017 saw initial challenges in policy, law, and information technology system triggered by its complexity and scale of change, which especially affected the informal sector. However, there were expeditious responses soon to rationalize rates and simplify compliance burdens. Besides, there had been positive dialogue and developments eventually paving the way for a smoother GST regime. The new Insolvency and Bankruptcy Code (IBC) was passed with the aim to address the issues of the Twin Balance Sheet and provide relief to stressed corporates in restructuring their business operations. IBC has provided a framework to enable resolutions and help corporates restructure their balance sheets and reduce their debts. Moreover, another critical move by the government was the announcement of a large recapitalization package (about 1.2% of GDP) to strengthen the balance sheets of the public-sector banks (PSBs).
These much-awaited and critical reforms are expected to boost corporate spending and increase lending by the banks especially to the critical and, currently-stressed sectors of infrastructure and manufacturing. Macroeconomic developments were in full swing during the year and India remained the second-best performer amongst major countries with strong macroeconomic fundamentals. India witnessed robust signs of revival in the second half of the year. Economic growth improved with the fading impact of the regulatory shocks, corrective actions being taken and the synchronous global economic recovery boosting exports. These solid improvements were tinged with anxieties related to macro-economic stability. Inflation was slightly higher than expected, as an outcome partly due to higher international oil prices – India’s historic macroeconomic vulnerability. These dualities of revival and risk have been reflected in the markets with the rising bond yields leading to a marked steepening of the yield curve and soaring stock prices.
India’s GDP is estimated to have increased 6.6 per cent in 2017-18 and is expected to grow 7.3 per cent in 2018-19. During the first half of 2018-19, GDP (at constant 2011-12 prices) grew by 7.6 per cent. India has retained its position as the third largest startup base in the world with over 4,750 technology startups, with about 1,400 new start-ups being founded in 2016, according to a report by NASSCOM. India’s labor force is expected to touch 160-170 million by 2020, based on rate of population growth, increased labour force participation, and higher education enrolment, among other factors, according to a study by ASSOCHAM and Thought Arbitrage Research Institute. India’s foreign exchange reserves were US$ 393.29 billion in the week up to December 21, 2018, according to data from the RBI.
Consumer prices in India rose 2.57 percent year-on-year in February of 2019, following a downwardly revised 1.97 percent rise in January and above market expectations of 2.43 percent. It is the highest inflation rate in four months as food prices fell less.The Union Budget for 2018-19 was announced by Mr Arun Jaitley, Union Minister for Finance, Government of India, in Parliament on February 1, 2018. This year’s budget will focus on uplifting the rural economy and strengthening of the agriculture sector, healthcare for the economically less privileged, infrastructure creation and improvement in the quality of education of the country. A total of Rs 14.34 lakh crore (US$ 196.94 billion) will be spent for creation of livelihood and infrastructure in rural areas. Budgetary allocation for infrastructure is set at Rs 5.97 lakh crore (US$ 81.99 billion) for 2018-19. All-time high allocations have been made to the rail and road sectors.
Numerous foreign companies are setting up their facilities in India on account of various government initiatives like Make in India and Digital India. Mr. Narendra Modi, Prime Minister of India, has launched the Make in India initiative with an aim to boost the
manufacturing sector of Indian economy, to increase the purchasing power of an average Indian consumer, which would further boost demand, and hence spur development, in addition to benefiting investors. Besides, the Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services digitally and to increase the digital literacy.
The Indian economy is facing headwinds arising from the emerging global geopolitical and economic scenario. Oil, end of quantitative easing, and trade wars are the three perils that the world faces. While crude oil price surge is the least complex of the shocks, the other two shocks – monetary policy normalization in most of the advanced economies and intensification of trade wars – take us to unchartered territory.
Elevated crude oil prices are having the most perceptible impact on current account deficit (CAD) and inflation. However, crude prices are expected to ease in 2019 on easing global demand and structural shift to non- conventional fuel alternatives, suggesting that its impact will be transitionary, unless oil prices stay elevated longer than expected, in which case the pressure on inflation and fiscal deficit can mount.
The retreat of the central banks of advanced economies – the United States (US) Fed and European Central Bank (ECB) from unconventional monetary policies can impact emerging markets such as India through interest rate changes and currency exchange rates. Research shows that US interest rate hikes plus quantitative tightening will have a greater impact on global financial conditions than the actions of the ECB and the Bank of Japan. Therefore, a faster-than-expected catch-up in inflation in the US can result in impulsive tightening, which would roil emerging markets.
Trade wars are intensifying and getting more complex. While US tariff walls are with other economies are rising and facing retaliatory action, within Asia there has been an attempt to lower them for each other. The endgame of trade wars is hard to fathom, but they certainly have injected uncertainty into global policy direction and their impact will play out via trade, investment, supply chain disruption, and the confidence channel. The tariffs imposed by the US so far impact 5.7% of India’s total exports to the country. The impact of the tariffs imposed thus far is rather limited with the tariffs on these commodities collectively working out to ~0.02% of India’s gross domestic product (GDP) and 1.2% of India’s CAD.
India is one of the fastest developing countries in the world. Aviation in India is broadly divided into two segments-Military and Civil aviation. The civil aviation industry in India has also accelerated during the last 10 years. Currently, India is the third largest domestic aviation market in the world and is even more expected to be the world largest domestic aviation market in the next 10 to 15 years.
In India, the first commercial civil aviation flight took place on 18th February 1911. The flight took off from Allahabad for Naini covering a total distance of nearly 10 kilometers. In the year 1932, JRD Tata started an airline. It started with the flying of a consignment of mail from Karachi to Juhu airport and this later came to be known as the Air India. Since then, the civil aviation industry growth in Indiahas been booming.The improvisation of various factors such as the introduction of low-cost carriers, modern airports, FDI in domestic airlines, the intervention of advanced information technologies and the ever-growing emphasis on regional connectivity has contributed towards a dynamic expansion of the civil aviation industry of India. According to a report, India has a large existing fleet of aircraft standing roughly at about 548 aircraft.
Owing to the quick rise of the demands in the civil aviation, it is expected that another 925 aircraft will be added in the next 5 years. The aviation market has continued to maintain its double-digit growth and hence it is evident that the aviation industry in India is not just growing but rapidly growing at a very high scale.These positive impact of growth in the aviation industry is not entirely because of the huge investment it receives but also clearly because of the various major initiatives were undertaken by the government. India, being a country with vast geographical extent,the need for connectivity has always been a top target for all the government.
In the quest for overall regional connectivity, the government has awarded 325 routes to existing airlines as well as helicopter operators so as to enhance the flight services even to the hilly and the most remote areas. A huge amount of funds have been sanctioned for various airport building and modernization projects. All these have been done to accelerate the growth even to a higher level. The introduction of the UDAN scheme by the government aims at making domestic connectivity especially the regional connectivity affordable and widespread.
Summary: it is un-denying fact that aviation in India is gaining good growth and there are even more opportunities to take it higher. The only requirement remains good policies and relentless focus on quality, cost and passenger interest.
The Indian aviation industry is expected to continue delivering a robust performance on the back of strong economic growth, expanding middle-class group and working population, business and leisure travel growth and expansion of aviation infrastructure. There has been impressive growth in domestic and international passenger traffic in recent times. Moreover, the untapped markets of Tier II and Tier III cities present huge growth opportunities aided by strong demand of air travel in these centers. Triggered by its strong foothold in domestic market, innovation-led excellence, customer-centricity, focus on network expansion and improving profitability, Spice Jet is well positioned to capitalize on the burgeoning aviation sector.
The world’s passenger fleet will more than double to 48,000 aircraft in 20 years with traffic growing at a resilient 4.4% per year, driving a need for 37,390 new passenger and freighter aircraft according to Airbus’ new Global Market Forecast 2018-2037. Growth drivers include private consumption increasing 2.4 times in emerging economies, higher disposable incomes and a near doubling of the middle classes globally. Emerging countries will account for over 60% of economic growth, with trips per capita to multiply 2.5 times for these nations. Combined with evolving airline business models and continuing liberalisation, the growing scale of air transportation will lead to an increasing resilience to regional slowdowns. Greater aircraft range and capacity through technological developments allow airlines the flexibility to explore new business opportunities whilst maintaining focus on cost reduction.
SpiceJet flying 50,200 passengers through its 380 flights across 52 destinations (45 domestic and 7 international) on a daily basis is one of India’s most preferred low-cost airline. Delivering highest standards in customer value at affordable fares, it facilitates in fulfilling flying dreams of millions thereby stimulating and sustaining passenger growth. Recording nine consecutive quarters of profits, industry leading load factor of over 90% for 24 consecutive months and averaged the best on-time performance for FY 2016-17.