For the week ended June 25, 2016:
In a historic
move, the UK voted out of the European Union (EU) during the past week. Prime
Minister David Cameron stepped down from office after the vote out. Various
reasons, including high net contribution by the UK to the EU as well as a
chance to regain economic sovereignty rather than being under the EU umbrella,
are responsible for this decision by the UK.
The decision could have important
trade and investment implications for India, since it is a major economic
partner. The UK is the 5th largest destination for India’s
merchandise exports and the 3rd largest investor into India over the
2000-16 period.
The centre relaxed
FDI norms in a number of sectors including defence, civil aviation,
information and broadcasting, pharmaceuticals, security and trading. Relaxation
in FDI levels, required route and related clauses have been changed.
While FDI
investments into India have been strengthening, however, India’s borrowing
trends remain quite dismal. Latest numbers on foreign borrowings reveal a
continued weak performance.
Further, domestic
credit offtake has slowed down to single digits in the past two months, falling
to back to a recent low of 8.7% as per the latest data.
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