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Wholesale price inflation unexpectedly dropped in January but, looking ahead, it still looks set to return to positive territory in Q1. … Wholesale Prices …
15th February 2016
Today’s CPI data for January confirm that the Reserve Bank was successful in meeting its near-term inflation target but also highlight the difficult task the RBI faces in achieving its medium-term targets. We maintain our view that the window for further …
12th February 2016
The government’s two new schemes aimed at reducing gold imports have had mixed results in their early stages. The Gold Monetisation Scheme has attracted little interest, while the Sovereign Gold Bond Scheme has made a decent start. Further success for the …
11th February 2016
Today’s release of another set of strong GDP data alongside upward revisions to earlier quarters’ growth rates is more likely to deepen doubts about the quality of the official data than improve sentiment towards India’s economy. … GDP …
8th February 2016
Inflation is likely to have risen at the start of 2016 on account of a further small rise in food inflation. Looking ahead, the FY16/17 budget is likely to incorporate a significant rise in public sector wages, which would add to the RBI’s difficult task …
5th February 2016
The Reserve Bank of India (RBI) kept its repo rate on hold at 6.75% today and, while the consensus is expecting further modest loosening later this year, we think that rates will remain unchanged throughout 2016. … RBI holds rates, no change likely in …
2nd February 2016
India's manufacturing PMI rose at the start of 2016, but the reading remains weak by past standards. The big picture is that local industry continues to face significant structural headwinds. … Manufacturing PMI …
1st February 2016
As attention turns to the government’s FY16/17 budget announcement on 29 th February, the finance ministry can look back on what appears to have been a successful FY15/16. We think that this year’s fiscal target will be met, and there has been evidence of …
29th January 2016
The consensus is expecting further, albeit limited, monetary easing in India over the coming months, but we continue to think that the rate-cutting cycle has come to an end. The Reserve Bank of India’s (RBI’s) aversion to financial market volatility means …
27th January 2016
The past month has seen India's benchmark Sensex stock index drop to its lowest level since the inauguration of Prime Minister Modi in May 2014. The latest slump is linked to the global equity sell-off but it has coincided with a souring of hopes that …
22nd January 2016
India has not been spared the sell-off in EM financial markets since the start of the year. The rupee is now at its weakest rate against the US dollar since the currency crisis of September 2013, while equities have dropped to their lowest level since the …
21st January 2016
With only two months of this fiscal year remaining, the finance ministry’s aim of raising nearly INR700bn in revenues through the privatisation of various state-owned companies looks impossible to achieve. Suggestions that a lower target will be set for …
20th January 2016
India’s trade deficit remained in check in December but this positive headline story masks the fact that exports continue to contract sharply. With progress on the reforms needed to support a vibrant export sector still slow, the government’s ambition to …
18th January 2016
As India is one of the world’s largest net importers of oil, the continued slide in global oil prices should ensure that the improvement in the current account position is sustained. Domestically, the government, rather than consumers, stands to benefit …
15th January 2016
Wholesale price inflation picked up in December and, looking ahead, we think that it will rise further, returning to positive territory early this year. … Wholesale Prices …
14th January 2016
A recent pick-up in domestic production and a fall in imports of coal have led to suggestions that the government is on track to meet its target of doubling output by 2020. But the sector continues to face longer-term challenges that make the target look …
13th January 2016
India’s consumer price inflation accelerated in December. While this doesn’t put the RBI’s inflation target for January 2016 under threat, it does highlight the difficult task the RBI faces in meeting its medium-term targets. This bolsters our view that …
12th January 2016
Inflation is likely to have risen in December on account of accelerating food inflation and the government’s incremental hiking of fuel duties even as global oil prices continue to slump. Further ahead, a potentially large rise in public sector wages …
7th January 2016
In our first India Watch of 2016, we outline the prospects for India’s economy over the coming year. The lagged effect of earlier policy loosening and weakness in global commodity prices should provide a small boost to economic growth this year. However, …
6th January 2016
The slump in India’s manufacturing PMI reading in December highlights that, despite the recent strength of the hard activity data, local manufacturers continue to face significant structural headwinds. … Manufacturing PMI …
4th January 2016
On the face of it, 2015 has been a decent year for the Indian economy. Admittedly, activity indicators are pointing to a slow and bumpy recovery, but conditions have undoubtedly improved following three years of tepid economic growth. Meanwhile, inflation …
23rd December 2015
The widening in India’s current account deficit in Q3 was due in large part to seasonal patterns. Over a four-quarter sum, the deficit narrowed and, given also that FDI inflows remain strong, there is little reason to be concerned over India’s external …
Financial markets in India have taken yesterday's decision by the US Fed to hike interest rates for the first time in nearly a decade in their stride. A bigger test might come if the Fed now tightens more aggressively than markets are anticipating over …
17th December 2015
Passage of the long-awaited Goods and Services Tax (GST) in India continues to be delayed by major issues ranging from disagreements over the tax rate itself to which items will be covered. Given this, the Finance Ministry’s hopes of introducing the GST …
16th December 2015
India’s trade deficit remained stable in November as the continued slump in exports was offset by another collapse in imports. With this trend set to continue, the overall current account position looks unlikely to return as a source of vulnerability any …
The rise in Indian consumer price inflation in November doesn’t put the RBI’s inflation target for January 2016 under threat, but it does highlight that the central bank cannot be certain of meeting its more challenging medium-term targets. This bolsters …
14th December 2015
Wholesale price inflation picked up in November and, looking ahead, we think that it will rise further over the coming months and return to positive territory by Q1 2016. … Wholesale Prices …
India’s industrial sector performed well in October and favourable cyclical factors should help to sustain healthier growth in coming months. But structural headwinds are likely to hold back local industry over the longer term. … Industrial Production …
11th December 2015
Inflation is likely to have accelerated in November, as last year’s slump in global oil prices begins to drop out of the annual comparison. Looking ahead, the Pay Commission’s recommendation for a large rise in public sector wages is likely to add to the …
8th December 2015
The RBI is expressing a high degree of faith in the finance ministry’s ability to offset a rising public sector wage bill by boosting tax revenues or trimming other forms of current spending. We fear this faith is misplaced and that public investment will …
7th December 2015
The Reserve Bank of India (RBI) kept its repo rate on hold at 6.75% today and, rather than just being on pause, we maintain our view that the loosening cycle is now at an end. … RBI holds rates, loosening cycle now at an …
1st December 2015
The fall in India’s manufacturing PMI reading in November highlights that, despite recent signs of a recovery in the hard activity data, local industry continues to face significant headwinds. … Manufacturing PMI …
GDP figures for Q3 suggest that India was the world's fastest-growing major economy last quarter. But the official data remain inconsistent with numerous other indicators which suggest the economy is undergoing a bumpy recovery after years of weak growth. …
30th November 2015
Plans to overhaul India’s archaic bankruptcy laws, due to be discussed in the upcoming winter session of parliament, would be a major step towards creating a more favourable business climate and easing constraints in the banking sector. What’s more, in …
27th November 2015
The Reserve Bank of India has cut policy rates by 125bp so far this year, but there are a number of reasons to think that it will keep the repo rate on hold not just at next week’s policy meeting but throughout 2016. In particular, the RBI faces a tough …
25th November 2015
Prime Minister Modi has spent much of November on official visits to the UK and Singapore, but a number of domestic issues have made this a month that he will want to forget. … State elections, strikes, and civil servant …
23rd November 2015
The Indian rupee has weakened against the US dollar over the past month and, looking ahead, the currency could drift a little lower as the US Fed begins to tighten policy. But given the big improvement in India’s current account position over the past …
19th November 2015
India’s consumer market is often the subject of frenzied interest among investors and commentators but, in recent years, growth has been held back by both cyclical and structural headwinds. In this Focus , we assess the prospects for a revival in Indian …
18th November 2015
India’s trade deficit narrowed in October and, looking ahead, there are reasons to think that the import bill will remain in check. Given this, the overall current account position looks unlikely to return as a source of vulnerability any time soon. … …
17th November 2015
Wholesale price inflation picked up in October and, looking ahead, we think that it will rise further over the coming months as the base effects that have helped to keep down food and fuel inflation continue to fade. … Wholesale Prices …
16th November 2015
The increase in India’s consumer price inflation in October doesn’t put the RBI’s inflation target for January 2016 under threat, but it underlines that policymakers cannot be certain that they will meet the more stretching target for early 2017. Given …
12th November 2015
Measures announced yesterday to further ease restrictions on foreign direct investment into India should help to build on one of the main policy successes of the Modi government so far. However, wider-ranging reform is still needed to provide a more …
11th November 2015
The heavy defeat for Prime Minister Modi and the BJP in the Bihar state assembly election suggests that political goodwill towards the winners of last year’s general election is beginning to run out, and also dampens prospects for economic reform at the …
9th November 2015
Inflation is likely to have risen in October, as the favourable base effects that helped to anchor food inflation in recent months continue to fade. With inflation expectations also edging up, there is little scope for further policy easing. … Inflation …
6th November 2015
Comments this week from RBI Governor Raghuram Rajan and Finance Minister Arun Jaitley hint at a welcome thawing in their frosty relationship. What’s more, they support our view that the rate-cutting cycle is now at an end. … Is monetary policy “just …
4th November 2015
The fall in India’s manufacturing PMI reading in October highlights that, despite recent signs of a recovery in the hard activity data, local industry continues to face significant headwinds. … Manufacturing PMI …
2nd November 2015
With more than half of the fiscal year having elapsed, the government’s aim of raising nearly INR700bn in revenues through the privatisation of various state-owned companies looks increasingly unrealistic. In response, rather than allowing the budget …
30th October 2015
The ongoing India-Africa Forum Summit in Delhi has been accompanied by a great deal of confused commentary on the nature and extent of economic relations between India and Africa. Contrary to what many seem to believe, the overwhelming majority of India’s …
28th October 2015
India’s two new schemes aimed at reducing gold imports, due to be rolled out next month, are likely to have mixed results. The Sovereign Gold Bond Scheme’s easy accessibility and more transparent returns make it more likely to succeed than the Gold …
27th October 2015
Despite the tailwinds of low inflation and reductions in interest rates over the past few months, consumer spending in India remains subdued. This is due in large part to continued problems in the labour market and the domestic banking system. With …
22nd October 2015
