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The Reserve Bank of India (RBI) kept its repo rate on hold at 6.50% today and, while the consensus is expecting further modest loosening later this year, we think that rates will remain unchanged throughout the rest of 2016 and 2017. … RBI holds rates, …
7th June 2016
The Reserve Bank of India (RBI) has cut its repo rate by 150bp since the start of last year, but we believe that it will now keep rates on hold not just at next week’s policy meeting but for the rest of 2016. To the extent the RBI does want to see further …
2nd June 2016
India's manufacturing PMI edged up in May, but the reading remained lacklustre. The big picture is that local manufacturers continue to face significant structural constraints. … Manufacturing PMI …
1st June 2016
There is some evidence that India’s economy has picked up speed recently but today’s remarkably strong GDP data are hard to believe. … GDP …
31st May 2016
The sharp rise in non-performing loans (NPLs) in Q1 does not indicate that there has been a sudden deterioration in asset quality in India, but instead suggests a greater recognition of stressed assets in the banking system that have been wilfully ignored …
30th May 2016
Two years on from his inauguration, Prime Minister Narendra Modi has arguably just enjoyed his most successful month in office. For a start, PM Modi's BJP secured two important legislative victories in the latest session of parliament. The first was the …
25th May 2016
The Indian rupee has weakened against the US dollar over the past month and, with the US Fed likely to tighten policy again over the coming months, the currency could depreciate a little more . But given the big improvement in India’s current account …
24th May 2016
Regional parties have dominated the state elections held over the past month, but there has also been an apparent strengthening of support for Prime Minister Narendra Modi’s BJP at the local level. On balance, the results should help at the margin to ease …
19th May 2016
Recent amendments to the tax treaty between India and Mauritius - the terms of which have made Mauritius the leading source of foreign investment into India - are likely to bring more benefits than costs to the Indian economy over the coming years. The …
17th May 2016
Indian wholesale price inflation rose sharply in April and returned to positive territory for the first time in 18 months. This reinforces our view that there is little scope for further monetary loosening. … Wholesale Prices …
16th May 2016
India’s monthly trade deficit narrowed to a five-year low in April. With a number of factors likely to keep commodity imports in check, the overall current account position is unlikely to return as a source of vulnerability any time soon. … Import …
Indian consumer price inflation rose above the Reserve Bank’s target for March 2017 last month, supporting our view that the scope for further loosening is very limited. … Consumer Prices (Apr.) & Industrial Production …
12th May 2016
The Lok Sabha’s vote in favour of an overhaul of India’s archaic bankruptcy laws is a step towards creating a more friendly business environment and easing constraints in the banking sector. What’s more, in contrast to many other issues, partisan politics …
10th May 2016
We think that consumer price inflation held steady April as the recent slowdown in food inflation appears to have run its course. With inflation only just below the RBI's 5.0% target for March 2017 and likely to edge up over the coming months, there …
5th May 2016
We think that consumer price inflation held steady April as the recent slowdown in food inflation appears to have run its course. With inflation only just below the RBI's 5.0% target for March 2017 and likely to edge up over the coming months, there is …
The drop in India's manufacturing PMI in April provides another reminder that local industry continues to face significant headwinds. … Manufacturing PMI …
2nd May 2016
Early forecasts of a stronger-than-normal monsoon in India this year have raised hopes of a boost to GDP growth and a drop in inflation as agricultural production gets ramped up. But the early forecasts are prone to revision and, in any case, there are a …
28th April 2016
Indian media has been awash with reports that RBI Governor Raghuram Rajan might not have his contract renewed when his term expires in September. In the unlikely case that this occurs, financial markets in India could come under pressure. The extent of …
25th April 2016
Recent policy tweaks from the RBI should help at the margins to boost bank lending, which has been moribund over the past few years. Most obviously, the 25bp rate cut this month means that the repo rate has now fallen by 150bp since January 2015. In …
22nd April 2016
Yields on India's local currency debt have fallen so far in April to their lowest in nearly three years. But with the scope for further monetary loosening now looking limited, we think that yields are more likely to edge up than fall further over the …
21st April 2016
The narrowing in India's trade deficit to a six-year low in FY15/16 is welcome news, but this masks the fact that exports slumped by over 15% last year. With progress on the reforms needed to create a vibrant export sector still slow, the government’s …
19th April 2016
Recent concerns over a potential market sell-off when the Reserve Bank‘s FX swap facilities, unveiled during the 2013 “taper tantrum”, mature have been overstated. For a start, the RBI has already confirmed that maturing swaps have been covered by …
18th April 2016
Wholesale price inflation was virtually unchanged in March but, looking ahead, we think that it will return to positive territory over the next couple of months. … Wholesale Prices …
Following years of weakness, there are signs that private consumption in India is finally finding its feet. Cyclical factors such as looser monetary policy should help to support the nascent recovery over the coming months. However, slow progress on …
14th April 2016
The drop in Indian consumer price inflation in March is likely to fuel talk of more interest rate cuts, but we think that the scope for further loosening still looks very limited. … Consumer Prices (Mar.) & Industrial Production …
12th April 2016
Inflation is likely to have fallen in March as food price pressures continued to ease. But further ahead, the RBI still faces a difficult task in meeting its inflation targets for 2017 and 2018. Given this, there is little scope to follow up on this …
7th April 2016
Having now cut its repo rate by 150bp since January 2015, the RBI yesterday re-emphasised the need for commercial banks to boost lending by passing on rate reductions to borrowers. In truth, high levels of bad debt mean that the banking system needs …
6th April 2016
The Reserve Bank of India (RBI) reduced its repo rate by 25bp to 6.50% today but, given the difficulties it faces in meeting its inflation targets for March 2017 and 2018, we think that rates will now stay on hold for a prolonged period. … RBI cuts repo …
5th April 2016
India's manufacturing PMI rose in March but, taking Q1 as a whole, the sector's performance remained lacklustre. Over the longer term, local manufacturers continue to face significant structural constraints. … Manufacturing PMI …
4th April 2016
The raft of upcoming state elections in India are likely to have an important bearing on economic policy at the local level. But perhaps more significant, the outcome of the state elections could be crucial in determining whether Prime Minister Modi's BJP …
31st March 2016
It's not a done deal yet, but the balance appears to be tipped towards the Reserve Bank of India (RBI) deliver ing another interest rate cut in next week's policy meeting . This is due to a number of recent developments, including the finance ministry 's …
29th March 2016
Developments over the past month have paved the way for the Reserve Bank of India to deliver another modest interest rate cut in its April meeting. For a start, the finance ministry pledged to maintain its fiscal deficit targets for the coming years in …
23rd March 2016
The narrowing in India's current account deficit in Q4 2015, along with the pick-up in foreign direct investment inflows, supports our view that the country's external position will remain far less a source of vulnerability than has been the case in …
22nd March 2016
India's financial markets have rallied over the past couple of weeks following a terrible start to the year. The rupee has strengthened, while local equities have made significant gains. Meanwhile, bond yields have edged down as markets have raised …
21st March 2016
The government’s plans to boost capital expenditure should help sustain the recent tentative pick-up in investment activity. But slow movement on the reform front means that a spectacular rebound is unlikely. … Investment activity showing tentative …
18th March 2016
India’s monthly trade deficit narrowed in February to its smallest since September 2013. With a number of factors likely to keep commodity imports in check, the overall current account position is unlikely to return as a source of vulnerability any time …
16th March 2016
Indian consumer price inflation dropped in February as food price pressures abated. However, the RBI still faces a difficult task in meeting its inflation targets for the next two years. … Consumer Prices …
14th March 2016
Wholesale price inflation held steady in February, but we think that it will return to positive territory over the next couple of months. … Wholesale Prices …
Today’s industrial production data suggest that output has continued to contract at the start of this year. The continued struggles of industry cast a dark cloud over the Modi government’s efforts to revitalise the economy. … Industrial Production …
11th March 2016
The recent market turbulence cast a spotlight on the potential for shifts in capital flows to destabilise emerging markets such as India. One factor that often gets overlooked is the role of overseas remittances. Remittance flows into India were twice as …
10th March 2016
Inflation is likely to have edged down in February as food price pressures have shown signs of abating. The chances of there being perhaps one more rate cut in the near term have risen, but this is because the FY16/17 budget adopted a tighter fiscal …
8th March 2016
Finance Minister Arun Jaitley’s budget on Monday was well received, with targets for further reductions in the deficit left unchanged and projected spending in key areas ramped up. But the plans are based on assumptions for revenue collection that look …
2nd March 2016
India's manufacturing PMI remained unchanged at a low level in February. The big picture is that local industry continues to face significant structural constraints. … Manufacturing PMI …
1st March 2016
At first glance, Finance Minister Arun Jaitley appears to have pulled off a difficult balancing act in today’s nbudget announcement. The tighter deficit targets have been left unchanged, while the budget plans include a rise in public sector salaries and …
29th February 2016
With markets and commentators focused on what will be unveiled in the FY16/17 budget on Monday, prospects for the rest of the current session of parliament have slipped under the radar. One of the more important issues is the proposed amendment to land …
26th February 2016
Prime Minister Narendra Modi's revamped “Make in India” programme aimed at turning the country into a global manufacturing and export powerhouse got off to a high-profile start during last week’s showcase in Mumbai. But the flagship initiative is still …
23rd February 2016
The Indian rupee has depreciated against the US dollar so far in 2016 to its weakest level since the 2013 "taper tantrum". But unlike three years ago, there is little reason for policymakers to panic. … Policymakers unfazed by rupee …
22nd February 2016
The key point of interest in the upcoming budget will be whether the finance ministry implements the large public sector pay rise that the 7 th Pay Commission recommended. We think it will and, with no obvious ways to either trim other forms of spending …
18th February 2016
Comments last week from RBI Governor Raghuram Rajan that local banks are in need of "deep surgery" has refocused attention on the ailing sector. Large-scale capital injections, increased private participation and a new bankruptcy code are all required to …
17th February 2016
India’s trade deficit narrowed at the start of 2016 as the continued slump in exports was more than offset by another collapse in imports. With a number of factors likely to keep commodity imports in check, the overall current account position is unlikely …
16th February 2016
