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Concessions to Trump may not prove enough All eyes are now on the Trump administration’s reciprocal tariff plans, due to be unveiled on Wednesday 2 nd April. There is still huge uncertainty around what form reciprocal tariffs will take. The administration …
28th March 2025
Equity jump unlikely to be start of sustained rally At the time of writing, India’s benchmark Sensex stock index has risen by 4% this week, making it its best week in almost three years. The big picture, however is that the Sensex is still 11% off its …
21st March 2025
Key risks: food prices, banks, tariffs This week we published our Q2 India Economic Outlook , which contains all of our latest analysis of India’s economy and financial markets (the forecasts and underlying data can also be viewed in our interactive India …
14th March 2025
US may be seeking more market access It’s been another eventful week on the tariff front, with the Trump administration going ahead with 25% tariffs on Canada and Mexico (as well as an additional 10% on China) on Tuesday before then announcing carve outs …
7th March 2025
More concessions may be coming One of the major talking points from our recent meetings with clients, policymakers and contacts in India was (unsurprisingly) the threat of Trump tariffs. As we noted here, India is one of the most exposed countries …
28th February 2025
Weaker rupee is not a big macro threat Under new leadership, the Reserve Bank appears to have taken a more flexible approach to exchange rate management. Amid broad dollar strength, that has meant that the rupee has fallen by more in the past two …
21st February 2025
Reacquainted amid tariff threat Looming large over this week’s meeting between PM Modi and President Trump was the latter’s threat of reciprocal tariffs on trading partners. Just before the meeting began, Trump said the new tariffs will take into …
14th February 2025
Fiscal restraint, monetary easing It’s been a busy week on the domestic policymaking front. The FY25/26 Union Budget contained some tax breaks aimed at boosting household consumption, but fiscal prudence was still very much the order of the day: the …
7th February 2025
Trump 2.0 and India Prime Minister Modi and US President Donald Trump this week spoke for the first time since Trump’s inauguration. Details of the call are scant, but the talks appear to have been relatively conciliatory – PM Modi referred to Trump as …
31st January 2025
Impact of 10% tariff on India would be small Although President Trump mentioned tariffs only briefly in his inauguration address, the White House released a memorandum soon after setting out the administration’s broad plans. As we explained here , …
24th January 2025
More rupee weakness a sign of shifting priorities Data released this week showed that headline consumer price inflation fell from 5.5% y/y in November to 5.2% y/y in December. (See Chart 1.) Our initial response to the data can be read here . Food …
17th January 2025
Greater rupee volatility hints at shift in FX strategy The Indian rupee was one of the most stable EM currencies against the US dollar in 2024. (See Chart 1.) That is in large part by design – the Reserve Bank of India (RBI) has a policy of intervening …
10th January 2025
Better data at the end of the year India’s economy is ending 2024 looking a little healthier than it had been. The flash editions of the manufacturing and the services PMIs both rose in the December readings that were published this week. (See Chart 1.) …
20th December 2024
New RBI leadership and inflation drop tips balance Two big developments this week have tipped the odds in favour of a repo rate cut at the RBI’s next meeting in February, or potentially even in an unscheduled meeting before then. The first was the …
13th December 2024
Rupee at record low belies exchange rate stability On the face of it, the recent moves in financial markets pose a dilemma for the Reserve Bank’s MPC, which earlier today voted to keep the repo rate unchanged at 6.50%. (See here for our initial response …
6th December 2024
BJP’s Maharashtra win reduces fiscal slippage risks The convincing win for Prime Minister Modi’s BJP-led alliance in the election in Maharashtra (see Chart 1) is likely to have provided some reassurance to the ruling national party that it maintains …
29th November 2024
Air pollution a modest but persistent headwind Even by India’s unenviable standards, there has been a marked deterioration in air quality over recent weeks. Air pollution in New Delhi has been above the government’s “severe” threshold for much of the …
22nd November 2024
Powerhouse state takes to the polls The dust is settling on the US election and we’ve been considering the implications for different economies and asset classes; clients can see all of our work on this dedicated webpage . For India Watchers, the action …
15th November 2024
Trump trade puts rupee under pressure All of our analysis of the US election can be found on this webpage and in the recording of an online briefing held after the result on 6 th November. In terms of the market reaction, the “ Trump trade ” has been in …
8th November 2024
The past week has been one of the more eventful for India in recent memory on the geopolitical front. The most eye-catching development was an agreement with China on patrolling arrangements along their disputed border in the Himalayas. News of the …
25th October 2024
Activity data point to softer patch for economy The latest activity data have brought further evidence that India’s economy has entered a softer patch. Household consumption growth appears to be slowing. The RBI’s latest consumer confidence survey for …
18th October 2024
RBI on course for December rate cut In a busy week for India Watchers, the key event was the Reserve Bank’s policy announcement on Wednesday. The MPC opted to keep the repo rate unchanged at 6.50%, with new member Nagesh Kumar the sole dissenter. But …
11th October 2024
Oil price risks still skewed to downside We learnt this week that India recorded a current account deficit equivalent to 1.5% of GDP in Q2 (Q1 of FY24/25), from a surplus of 0.5% of GDP in Q1. Of course, seasonal factors are at play; smoothed out over a …
4th October 2024
Flagship policy falling short of aims This week marked the 10 year anniversary of PM Modi’s flagship “Make in India” policy initiative. Its aim was to encourage both foreign and local companies to develop, manufacture and assemble products in India and …
27th September 2024
RBI will focus on domestic factors rather than Fed Events this week have been dominated by the Fed’s 50bp rate cut to kick off its easing cycle. Clients can read our analysis of the decision here and watch our online briefing on demand here . Some EM …
20th September 2024
More signs of a thawing in relations with China We recently took a deep-dive into the evolution in Sino-Indian relations (see here ), arguing that India’s attempt to establish more conciliatory relations with China speaks to an important way in which …
13th September 2024
Growth slowing, but economy still in good shape After all stellar run over recent quarters, data released late last week showed that GDP growth slowed in Q2 (Q1 of FY24/25) to 6.7% y/y, from 7.8% y/y in Q1. (See our initial response to the data here .) …
6th September 2024
MPC dissenters Varma and Goyal to step down As was widely expected, it was confirmed this week that the MPC’s three “external” members (who have careers outside the RBI and are selected by the government) will step down when their current terms expire on …
30th August 2024
RBI Governor pushes back against change to target A longstanding debate in Indian policymaking circles over which measure of consumer price inflation the RBI should target has been reignited in recent weeks. In the Government’s Annual Economic Survey …
23rd August 2024
Regulator comes under fire in Adani Group saga The Adani Group/Hindenburg Research saga took a new twist this week, 18 months after the publication by the US short-seller alleging “brazen stock manipulation and account fraud over the course of decades” …
16th August 2024
Our Asia team will be holding a Drop-In on Wednesday 14th August at 0830 ET/1330 BST to discuss the timing of Asian interest rate cuts and the impact of global markets volatility. Register here for the 20-minute online briefing. Weakening against a weak …
9th August 2024
Bond restrictions highlight investor wariness The Reserve Bank of India (RBI) this week announced restrictions on foreign investment on all newly-issued 14-year and 30-year local-currency sovereign bonds. Effective immediately, foreigners will now only be …
2nd August 2024
Budget shows focus on employment for Modi 3.0 The government presented the FY24/25 Union Budget on Tuesday, in which it managed to further lower the deficit target while largely fulfilling the spending demands of the BJP’s new coalition partners. We …
26th July 2024
Full Budget a key test for new government For India watchers, the Union Budget announcement on Tuesday 23 rd July will be one of the key economic events this year. In election years, the Union Budget takes place later than normal and often contains new …
19th July 2024
Full Budget a key test for new government The Finance Ministry confirmed this week that the full Union Budget for FY24/25 will be unveiled on Tuesday, 23 rd July (recall that during election years, an “interim” Budget is held in February). We’ll be …
12th July 2024
Final preparations are reportedly in place for Prime Minister Modi to travel to Moscow early next week to meet his Russian counterpart Vladimir Putin. This will be Modi’s first trip to Russia since the invasion of Ukraine, though the two leaders did meet …
5th July 2024
More to plunge in inward FDI that meets the eye The Q1 2024 Balance of Payments data released this week has refocused attention on the slump in net foreign direct investment (FDI) inflows. In the four quarters to Q1, net FDI inflows dropped to US$26.5bn, …
28th June 2024
Bond index inclusion a positive for government… The Indian government’s long-awaited ambition to have its local currency bonds included in global indices will finally come to fruition next Friday when JPMorgan Chase adds the country to its GBI-EM Global …
21st June 2024
Prime Minister Modi’s third term got underway this week with the selection of the new cabinet. 25 of 30 cabinet ministers are unchanged from the previous government, including all of those in key roles. (The remaining five spots have been freed up for the …
14th June 2024
Equities up at the end of an extraordinary week The dust is settling on an extraordinary week for domestic politics and financial markets. Equities rallied on Monday (See Chart 1) following the release of election exit polls at the weekend pointing to a …
7th June 2024
Will PM Modi secure another majority? Voting in India’s seven-week election extravaganza ends tomorrow, and results are due to be announced on Tuesday 4 th June. Clients can see all of our election insights here . We will also be discussing the election …
31st May 2024
The mammoth general election is entering its final week, with just 115 of the 544 constituencies left to vote before the result is announced on 4 th June. Clients can see all of our election insights here . We will also be discussing the election result …
24th May 2024
Non-aligned policy to be tested in US-China divide This week we took a deep-dive into a topic that regularly comes up in our conversations with clients: how India positions itself in a fragmenting global economy. (See here .) Our analysis makes the point …
17th May 2024
Sticking to Q3 call despite shifting consensus The latest poll from Bloomberg published this week show that the consensus is now expecting the RBI to begin its easing cycle in Q4. It is now forecasting 50bps of cuts by the end of the year, which would …
10th May 2024
Trump’s return could benefit India With Donald Trump’s protectionist approach to trade on full display in an interview with the Time magazine this week, what might the implications of a second Trump presidency be for India? India is not as dependent on US …
3rd May 2024
Ongoing heatwaves are a risk to inflation The past couple of weeks have brought more good news on India’s economy. The flash composite PMI for April released on Tuesday rose to a near 14-year high. (See Chart 1.) That suggests that the strength of …
26th April 2024
BJP on course for another big win The biggest (and most expensive) vote in history commenced today as India started voting in its general election. Almost a billion people are eligible so given the daunting logistical challenge, voting will take place …
19th April 2024
Encouraging signs for manufacturing sector The general election is a week away and manifestos have finally been released. The main opposition Indian National Congress (INC) party has now published its full manifesto, while the BJP published manifestos for …
12th April 2024
Identifying pockets of risk amid the optimism The positive news on India shows no signs of abating. The final composite PMI reading for March released this week rose to a 90-month(!) high. (See Chart 1.) That was underpinned by strength in both the …
5th April 2024
External position looks secure Balance of payments data released this week show that India’s current account deficit narrowed from US$11.4bn (1.3% of GDP) in Q3 2023 to US$10.5bn (1.2% of GDP) in Q4. Taking a longer perspective of the four quarters to Q4, …
28th March 2024
