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In the context of the hawkish tone of the RBI’s latest policy minutes, the large jump in core CPI inflation last month paves the way for a rate hike at the central bank’s next policy meeting in June. … Consumer Prices …
14th May 2018
Policymakers don’t put much weight on the wholesale price measure of inflation, but the fact that it accelerated in April nevertheless supports our view that policy tightening is likely this year. A particularly sharp pick-up in consumer price inflation …
Indian industrial production growth slowed in March, but the rate of growth is still reasonably healthy and the sector appears to have performed well across Q1 as a whole. Looking ahead, prospects for local industry remain relatively upbeat over the near …
11th May 2018
The trend of political parties in India promising loans waivers to farmers ahead of state elections seems increasingly well entrenched. As a result, the fiscal costs are continuing to mount. We estimate that the loan waivers already announced are …
9th May 2018
Consumer price inflation is likely to have risen in April, due in large part to a rise in fuel inflation. Core price pressures are also continuing to build. We are one of only a handful of forecasters expecting the RBI to tighten policy before the end of …
8th May 2018
In India’s decentralised political system, state elections such as the upcoming vote in Karnataka can have a direct bearing on economic policy. Arguably more significant though, a convincing performance for Prime Minister Modi’s BJP in Karnataka would …
4th May 2018
India’s manufacturing PMI edged up in April, suggesting that the sector strengthened a touch at the start of Q2. Looking ahead, prospects for local manufacturers look relatively bright over the near term. … Manufacturing PMI …
2nd May 2018
The government announced over the weekend that it has successfully managed to electrify all villages in India, meeting its deadline of 1st May 2018 that it set three years ago. But in reality, a large chunk of the population still lacks reliable access to …
30th April 2018
Remittance inflows are an important source of external funding for India, and were equivalent to 3% of GDP in 2017 – larger than FDI and portfolio inflows combined. Though there are some risks, remittance inflows look set to remain strong over the coming …
27th April 2018
Indian GDP growth hit a five-quarter high in Q4 2017, and various indicators suggest that the economy strengthened further in the first quarter of 2018. Industrial production growth last quarter may have been stronger than at any time since 2011, while …
24th April 2018
Over the past month, there have been significant gyrations in India’s bond market. A drop in yields in the first half of April has been followed by a sharp jump more recently, exacerbated by a hawkish set of RBI policy minutes last week. Looking ahead, we …
23rd April 2018
The minutes of the Reserve Bank of India’s April policy meeting show that, despite the recent drop in headline inflation, the MPC is still concerned about the upside risks to the outlook. … MPC minutes highlight upside risks to …
20th April 2018
The government has set an ambitious privatisation target for FY18/19, emboldened by exceeding target last year. But meeting this year’s target is dependent on a smooth sale of a large stake in Air India, which seems unlikely. If the privatisation target …
17th April 2018
Headline wholesale price inflation held steady in March. But with core price pressures still elevated, we remain comfortable with our view that policy rate hikes are likely later this year. … Wholesale Prices …
16th April 2018
India’s trade deficit widened in March, but we think it will still remain comfortable over the coming months despite the recent ramping up of trade-related attacks by the US. … External deficit in check amid rising trade …
The slight drop in consumer price inflation in March was due to another decline in food and fuel inflation. Core inflation picked up and is likely to accelerate further. As such, we remain comfortable with our view that interest rate hikes are likely this …
12th April 2018
India has not been spared the recent ramping up of trade-related attacks by the US, with the most notable action so far being the challenge to India’s use of export subsidies at the WTO. However, India is unlikely to be a labelled a “currency manipulator” …
11th April 2018
A bigger corporate bond market in India could reduce local firms’ heavy reliance on bank loans to obtain funding and improve the pricing of risk, which would have knock-on benefits for the banking sector. Recent moves to lift restrictions on foreign …
10th April 2018
Early forecasts of “average” levels of rainfall during this year’s monsoon have led to a rush of speculation on the potential economic impact. But the early forecasts are prone to revision and, in any case, the monsoon matters less to growth and inflation …
9th April 2018
Consumer price inflation is likely to have eased in February, due to a further drop in food inflation. But core price pressures are still building. We think this will ultimately prompt the Reserve Bank to begin tightening policy over the coming months, …
6th April 2018
The RBI’s decision to hold its repo rate at 6.00% today came as no surprise. But we think that elevated core inflation and looser fiscal policy will prompt the central bank to raise interest rates in the second half of the year, much sooner than the …
5th April 2018
India’s manufacturing PMI edged down in March, following the trend across most of Asia. But we doubt this marks the start of a sharp downturn. In fact, over the near term at least, prospects for local manufacturers look relatively bright. … Manufacturing …
3rd April 2018
The Reserve Bank of India (RBI) looks set to keep its policy rates on hold at the meeting that ends on Thursday 5th April. But we think that elevated core inflation and looser fiscal policy will prompt the central bank to raise interest rates before too …
29th March 2018
After taking a significant hit in the aftermath of demonetisation in late 2016, India’s rural economy has regained momentum in recent months. Future prospects for the rural economy look bright, in large part because, with political considerations in mind, …
28th March 2018
There has been much focus over the past month on the shift towards greater trade protectionism by the US, and yet arguably the most significant development from India’s perspective was the action by the US to challenge India’s export subsidy schemes at …
23rd March 2018
Indian equities have continued to drop so far in March, even as many other major stock markets have stabilised after the turbulence in February. Looking ahead, we expect Indian equities to fall a bit further over the next 18 months or so. … Equities …
22nd March 2018
A drop in foreign direct investment inflows and a pick-up in portfolio inflows into India has led to concerns that the economy is once again becoming vulnerable to a sudden halt in foreign financing. But FDI inflows are likely to recover and, more …
21st March 2018
India is one of many economies facing a more protectionist stance from the US. Its dependence on exports to the US is low though, an inadvertent positive stemming from its failure to develop a world-beating manufacturing sector. … Trade deficit stabilises …
15th March 2018
Headline wholesale price inflation edged down in February. But stripping out the effect of volatile fuel and food prices, our measure of core WPI inflation rose accelerated month. With reasons to think that core price pressures will rise further, we …
14th March 2018
The fraud scandal engulfing Punjab National Bank, India’s second largest state-owned bank, is a stark reminder that recent measures to revive the banking sector, including the recapitalisation package, need to be supplemented with wider governance reforms …
13th March 2018
The drop in consumer price inflation in February was due to another decline in food and fuel inflation. Core inflation remains high and could well rise further. As such, we remain comfortable with our view that policy rate hikes are likely this year. … …
12th March 2018
Consumer price inflation is likely to have eased in February, due to a drop in food and fuel inflation. But core price pressures are still building. We think this will ultimately prompt the Reserve Bank to begin hiking interest rates over the coming …
8th March 2018
Talk of India’s potential to become the “next China” is inevitable given their enormous populations, and will intensify as China’s economy slows. Those hoping that India can match China’s former rates of economic growth are likely to be disappointed. …
7th March 2018
India’s manufacturing PMI edged down in February. But the reading is still strong, and prospects for local manufacturers look relatively bright over the near term. … Manufacturing PMI …
1st March 2018
Today’s national accounts data show that India’s GDP growth accelerated to a five-quarter high in Q4 2017. The data are much-maligned, but the broad trajectory of a pick-up in growth seems reasonable, and we think that the economy will continue to …
28th February 2018
Prime Minister Modi is facing his busiest year of state elections in 2018. Elections that are due to take place this year will have an important bearing on economic policy at the local level, and will also go some way to determining whether the ruling BJP …
27th February 2018
Recent hikes to import duties on various goods appear to be an attempt by Prime Minister Modi and the BJP to shore up popular support ahead of a clutch of state elections this year, and the general election in 2019. But while the moves may help some local …
23rd February 2018
Indian financial markets have not been able to escape the recent turmoil in global markets, with equities dropping sharply and the rupee weakening against the US dollar. Looking ahead, we expect further falls in equities. But we have revised our forecasts …
22nd February 2018
The minutes of the Reserve Bank of India’s (RBI’s) February policy meeting show that most MPC members are concerned about recent fiscal developments and the inflation outlook. Indeed, with core inflation now at multi-year highs and set to accelerate …
India’s monthly trade deficit widened to its highest level since the taper tantrum in January. But we don’t think this is reason to panic just yet. Exports should rebound following disruptions related to the GST, while commodity imports are unlikely to …
15th February 2018
Headline wholesale price inflation eased in January, but stripping out the effect of volatile fuel and food prices, our measure of core WPI inflation rose last month. With reasons to think that core price pressures will rise further, we remain of the view …
The slight easing of consumer price inflation in January was due to a decline in food and fuel inflation. Core inflation remained elevated and is set to rise further. We remain comfortable with our non-consensus view that policy rate hikes are likely this …
12th February 2018
Consumer price inflation is likely to have accelerated again in January, due to another rise in food inflation. But core price pressures are also continuing to build. This was acknowledged by the RBI earlier this week as the statement accompanying its …
8th February 2018
The RBI’s decision to hold its repo rate at 6.00% today came as no surprise but it sounded notably more hawkish in the policy statement. This supports our non-consensus view that rate hikes are likely later this year. … RBI turns more …
7th February 2018
We are in agreement with financial market and analyst expectations that rates will be left on hold at the upcoming policy meeting of the Reserve Bank of India (RBI) on Wednesday 7th February. However, while most are also expecting rates to remain on hold …
2nd February 2018
The finance ministry faced a tricky balancing act in today’s budget announcement for FY18/19 as it aimed to shore up popular support ahead of a busy 18 months of elections while also demonstrating continued commitment to fiscal prudence. Given this, it is …
1st February 2018
India’s manufacturing PMI slipped in January from December’s five-year high. But the reading is still strong, and prospects for local manufacturers look relatively bright over the near term. … Manufacturing PMI …
A key theme running through the government’s latest Economic Survey is the growing numbers of workers and firms being brought into the formal economy, and so subject to taxation and closer regulatory oversight. The immediate benefits should not be …
30th January 2018
The finance ministry faces a delicate balancing act in the upcoming union budget for FY18/19, which will be unveiled on 1st February. On the one hand, it will be under pressure to loosen policy ahead of upcoming state elections and with the 2019 general …
26th January 2018
The latest data suggest that India’s industrial sector has strengthened significantly in recent months, underlining that any disruption from the introduction of the GST in mid-2017 was short-lived. Industrial production growth rose to a two-year high of …
24th January 2018
