“The two economies that were among the fastest growing in the world, China and India, are showing signs of a loss of growth momentum,” the Geneva-based organisation said.
A slowing economy has prompted the government to announce a slew of measures to pump up economic activity. The government has slashed base corporate tax rate to 22% from 30% for domestic companies and proposed a competitive 15% rate for new manufacturing units, offering a .`1.45 lakh crore fiscal boost as part of a series of steps to revive growth. Besides measures to boost exports and the real estate sector, finance minister Nirmala Sitharaman has announced mergers of public sector banks, opened up foreign direct investment in contract manufacturing and eased norms for overseas investors in single brand retail and coal mining.
UNCTAD’s analysis shows that public and especially development banks are insufficiently capitalised to scale up their required role. Some banks are highly engaged-—with outstanding loans by the China Development Bank at over 13.4% of China’s GDP and the Korean Development Bank at 10.5% of Korea’s GDP—but other public banks in countries such as India, Malaysia, Mexico, the Russian Federation and South Africa have anorexic loan portfolios at just between 1% and 2% of their countries’ GDPs. This is too low for the Sustainable Development Goals or for a Global Green New Deal.
As clean energy initiatives and GHG reduction policies lead to ample job creation, it is tempting to see them as potential foundations for local industrial development.