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  • 6 Things to expect in the new fiscal year

    The financial year is drawing to a close. Many of you would be sorting out your papers for accounting purpose. Your trading account will generate a profit and loss statement at the end of the month. But, it is also the time to reflect over the last twelve months and prepare for the next. There are a number of events that could influence your profits next year.

    Here are 6 things to expect in the new fiscal year.

  • India may grow faster

    With remonetisation going forward at a rapid pace, an increase in economic activity can be expected in the coming months. The government’s Economic Survey forecast the Gross Domestic Product (GDP) to grow at the rate of 6.75-7.5% in the year 2017-18. This could be a rise from the 7.1% estimated for the current fiscal. These numbers are in line with the growth forecasts of most independent analysts across the world.

  • Goods and Services Tax to roll out

    The country is likely to witness the implementation of the long-awaited Goods and Services Tax (GST) in the first half of the upcoming fiscal. At the moment, the Indirect Tax structure is very complex in the country. There are lots of taxes levied by the state and central governments on both goods and services. The GST can help streamline the different types of taxes by implementing a single taxation system in the country. This makes it one of the biggest tax reforms the country has witnessed in recent times. It will be interesting to watch how the impact of demonetization and GST plays out over the coming months.

  • El Nino could affect monsoon

    Agriculture is the primary source of livelihood for around 58% of India’s population. And Indian farmers are still largely dependent on the monsoon for a good harvest. However, meteorologists suggest that farmers need to beware of the El Nino in the coming year. The El Nino is a weather phenomenon that often causes disruption in the monsoon pattern. This can create complications for the agriculture sector. In the last few years, erratic rainfall and consecutive droughts in 2014-15 and 2015-16 have resulted in poor productivity in the country. And history may repeat itself if the El Nino plays havoc during the next year.

  • Global trade could decline

    Going by the international estimates, it looks like the trade prospects don’t seem bright in 2017. The World Trade Organisation (WTO) projected a growth rate of 1.8-3.1% for world trade in the year 2017. This is a step-down from the 3.6% growth rate it had projected earlier. A major reason for this conservative estimate is the increasing protectionism among various countries. For instance, the US is India’s largest export destination for goods as well as services. However, the Trump administration is taking a hard stance to shield the American economy from foreign goods and workers. The possibility of right-wing parties winning the upcoming elections in France and Germany could result in a similar narrative in Europe. This has already forced Indian companies to rethink their strategies as they stare at a fall in exports next year. It may be worthwhile to keep an eye on the trade and current account deficit numbers next year.

  • Rise in commodity and crude oil prices

    Over the last two years, India benefitted due to a slump in commodity prices. However, this could change. The World Bank projected a slight recovery for most commodities in 2017. A 4.1% increase in metals and minerals is expected along with a 1.4% increase in agricultural prices. In addition, it also forecast an increase in crude oil prices to $55 per barrel from $53 per barrel. An increase in crude oil and commodity prices can complicate India’s battle against inflation. This is due to the fact that a rise in oil prices can significantly increase the India’s import bill, affect the rupee’s value and even affect the government’s fiscal deficit (the amount by which the government spends more than it earns). Any or all these factors could push up inflation.

  • Demand pick-up

    The RBI’s Monetary Policy Committee believes that consumers are likely to spend more in the first few months of 2017-18. This could signify the end of any negative impact of demonetisation on consumer demand. The committee expects Discretionary consumer demand to lead the way for a demand pick-up in the country. Discretionary goods are those that aren’t essential to day-to-day life. Cars and electronic products are examples of such goods. The committee also expects the impact of demonetisation on cash-intensive sectors like retail trade, transportation and restaurants to end. As a result, economic activity in such industries is expected to be restored to previous levels. The fall in lending rates because of demonetisation could also help spur consumption and investment demand, the committee believes.

    • Economic and political expectations in the new fiscal year: Read more

    • India’s growth story in 2017-18: Read more

  • Rs 50,000 Crore

    GST will replace a range of central and state taxes such as excise duty, VAT and service tax. This means loss of tax revenue for the states. The central government, thus, plans to pay around Rs 50,000 Crore to states as compensation, as per Finance Minister Arun Jaitley.