India’s National Export Credit Agency Investor Presentation September 2019
Presentation Outline Exim Key Credit Highlights The India Story The Exim Bank Story Appendix 2
Exim Bank: Key Credit Highlights
Exim Bank: Key Credit Highlights 1 Set up under an Act of Parliament in 1981 India: Strong Macro backed by supportive policy Environment 100% owned by the Government of India (“ GoI ”) 5 Board and Policy Bank for India’s Economic Diplomacy 2 Management India’s engine Strength Exim: for growth of International investment grade ratings at par with Sovereign Proxy to International Sovereign Trade Policy Business Guaranteed / Insured by the Sovereign Financial Strength Strong regulatory capital position Policy Role at 4 National Level Exim Bank Bonds eligible for inclusion in EMBIG 3 4
The India Story
India: Strong Macro backed by supportive Policy Environment Resilient GDP Growth (1,2,3) 8.2% 8.0% 7.2% 7.2% 7.0% 6.8% 7.4% 7.2% 6.8% 6.8% 6.6% 6.2% 6.0% 2779 3.8% 2626 (US$ bn) 3.6% 3.5% 2287 3.2% 2148 2043 54.3% 53.5% 52.7% 52.3% 51.8% 2.9% 2.6% 2.2% 29.6% 29.3% 1.9% 29.4% 30.0% 30.0% 17.9% 17.2% 16.1% 18.2% 17.7% CY 2017 CY 2018 CY 2019 P CY 2020 P FY 15 FY 16 FY 17 FY 18 FY 19E Agriculture (%) Industry (%) Services (%) Real GDP Growth (%) India China United States World • World’s 7th largest economy based on nominal GDP in CY 2018. (2) o Nominal GDP for CY 2018: ~US$ 2.7 tn. (2) • World’s 3rd largest economy based on GDP measured in PPP terms in CY2018. (2) o GDP in PPP terms for CY 2018: ~US$ 10.5 tn. (2) • India is set to become the 5th largest economy based on nominal GDP by 2019. (2) • Real GDP growth estimated at 5% in Q1 FY20 (3) ; Full year growth projected at 6.9% in FY20. (4) • India jumped up 23 notches to the 77th position from 100 during 2017- 18 on the World Bank’s ‘Ease of Doing Business’ Index 2019 . Source: (1) Institute of International Finance (IIF); (2) IMF World Economic Outlook April 2019 & July 2019 Update. Data for CY; (3) Ministry of Statistics and Programme Implementation (MOSPI); (4) Reserve Bank of 6 India (RBI); CY means calendar year ; FYxx means financial year ended March 31, 20xx.; E- IIF Estimates; P – IMF Projections
Indian Economy: Key Economic Indicators General Government Debt (% of GDP) (1) Key Macroeconomic Metrices Key Parameters FY17 FY18 FY19 Change 68.9 68.6 68.3 66.6 65.2 Gross Domestic Saving (% of GDP) (3) 30.3 30.5 - - 17.1 15.2 19.8 20.1 15.6 Gross Domestic Investment (% of GDP) (3) 30.9 32.3 - - Gross Fixed Capital Formation (% of GDP) (3) 28.2 28.6 29.3 70 bps Fiscal Deficit (% of GDP) (3) 3.5 3.5 3.4 (10 bps) 51.4 51.5 49.6 49.1 48.2 Revenue Deficit (% of GDP) (3) 2.1 2.6 2.2 (40 bps) FDI Inflows (US$ bn) (2) 60.2 61.0 64.4 5.60% FY 15 FY 16 FY 17 FY 18 FY 19E Exchange Rate (INR/US$, avg.) (2) 67.1 64.5 67.1 4.10% Centre State Inflation/ Policy Rates (2)* Banking Sector Statistics (2) Key Parameters FY17 FY18 FY19 Change Credit Deposit Ratio 73.0 74.2 78.2 400 bps Banking Sector CRAR 13.7 13.8 14.3 50 bps Banking Sector NPAs 8.6 11.2 9.1 (210 bps) Provision Coverage Ratio 43.5 48.3 60.9 1260 bps NBFC CRAR 22.1 22.8 19.3 (350 bps) NBFC NPAs 6.1 5.8 6.6 80 bps Source: (1) Institute of International Finance (IIF) Database; (2) Reserve Bank of India, Press Releases and Online Database (accessed online on 10/09/2019); (3) Central Statistics Office; E- IIF Estimates; * Annual 7 Average CPI inflation with base year 2012=100
Sound External Sector Trade Trends (1)(2) Composition of CAD (2) 639 584 538 499 126 480 439 118 (US$ bn) (US$ bn) 96 208 195 FY17 FY18 FY19 163 -0.6% 513 163 466 136 384 36 330 304 276 -14.4 -1.9% 55 -2.1% 127 81 -48.7 -57.2 FY17 FY18 FY19 FY 20 (Apr-Jun) Trade Deficit Services Surplus Primary Income Services Exports Services Imports Merchandise Exports Merchandise Imports Secondary Income Current Account Deficit CAD (% of GDP) Merchandise Trade Pattern in FY 19 (1) Services Trade Pattern in FY19 (2) Exports 46 40 44 37 29 28 25 27 53 Exports US$ 208 bn US$ 330 bn 80 28 17 5 19 46 US$ 513 bn Imports 141 65 48 55 46 34 32 20 73 Imports 7 22 21 3 40 33 US$ 126 bn Telecom, computer & information services Travel Petroleum Products Gems & Jewellery Chemicals Transport Financial services Electronics Items Machinery Ores & Minerals Other Business services Others Base Metals Transport Equipment Others Agri & Allied Products Textiles 8 Source: (1) MOCI; (2) Balance of Payment Statistics, RBI; CAD – Current Account Deficit
Sound External Sector Major Trading Partners (1) Regional Trade Direction (1) CIS, USA China Latin Latin America Baltics & CIS, Baltics & Rep. of Korea Saudi Arabia America 5% Hong Kong Switzerland 17 UAE Others Others Singapore Indonesia Africa 4% Germany Africa 0.3 2% 2% Malaysia 9% Belgium 8% (US$ bn) Japan Iraq Iran 88 87 North 60 North 34 America 31 28 24 24 Asia 21 21 19 18 17 17 17 America Exports Imports 8% 49% 17% -5 -4 -5 -8 -12 -6 -54 -4 -10 Europe -11 -17 Asia -21 15% -23 62% Europe Total Trade Trade Balance 20% India’s Export Markets (1) India’s Import Sources (1) USA China 14% 16% USA UAE 9% 7% China UAE 6% 5% Saudi Arabia Hong Kong 4% 6% Singapore Iraq 4% 4% Switzerland UK 4% 3% Bangladesh Hong Kong 4% 3% Rep. of Korea Germany 3% 3% Singapore 3% Netherlands 3% Indonesia Nepal 3% 2% Note: Data for North America does not include Mexico; Mexico has been included in Latin America; the above charts represent India’s merchandise trade for FY 2019 9 Source: (1) MOCI
External Debt vis-à-vis External Reserves Analysis of External Debt vs External Reserves (US$ bn) External Debt 543.0 External Reserves 412.9 External Debt External Reserves As on Mar 2019 As on Mar 2019 5% 2% 6% 1% 11% Commercial Borrowings Short Term FC Assets 38% Non Resident Gold 20% Multilateral SDRs / Reserve Tranche Bilateral Trade Credit 93% 24% (1) ‘Volatile Capital Flows’ is defined to include cumulative portfolio inflows and short-term debt (RBI). For FY19, Volatile Capital Flow ratio pertains to end- Dec’ 18; (2) Volatile Capital Flows to Reserves ratio peaked at 10 97.4% in September 2013; (3) Source: RBI/Ministry of Finance, Government of India; * Short-term debt with residual maturity
Key Highlights of the Union Budget 2019-20 • India GDP growth targeted to move from US$ 2.7 trillion to US$ 5 trillion Rising to US$ 5 ‒ In terms of PPP, India is currently 3rd largest economy, next to China and the USA trillion Economy ‒ Specific focus on building infrastructure, Make in India, Digitized Economy and resource management • India to continue on path of fiscal discipline with focused reduction of Fiscal Deficit ‒ Fiscal Fiscal Deficit is targeted at 3.3% of GDP, lower than the revised estimate of 3.4% in FY 2018-19 ‒ Financial reform, proposed disinvestment and structural reforms to assist in achieving lower fiscal deficit Discipline ‒ Debt to GDP ratio to be brought down to 40% by 2024-25. India’s Debt to GDP ratio was at 47.8% in 2018-19 • Recapitalization of INR 700 billion for Public Sector Banks (PSBs) to help bolster the capital base • Credit Guarantee Enhancement Corporation to be setup in FY20 to free up bank lending to Infrastructure sector • Partial credit guarantees to PSBs that buy highly rated pooled assets from financially sound NBFCs. Higher regulatory powers to RBI Promoting over NBFCs and HFCs to be regulated by RBI • Statutory limit for FPI investment in a company increased from 24% to sectoral foreign investment limit with option given to the Financial Sector concerned corporates to limit it to a lower threshold. • FPIs will be permitted to subscribe to listed debt securities issued by ReITs and InvITs • Proposal to Issue Sovereign Bonds in International Debt Capital Markets 11
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