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Markets seem certain that the RBI will keep interest rates on hold next week, but we are not so sure. Inflation has fallen much further than most had expected, GDP growth is still weak by past standards, current account vulnerabilities have declined, and …
26th November 2014
The surge in the Sensex stock index to an all-time high in November has come amid signs that Prime Minister Modi is now more willing to push through wideranging reform following the BJP’s decisive victories in two key state elections last month. …
24th November 2014
India looks set to miss its fiscal target this year, even in the optimistic case that the government fully delivers on its plans to sell stakes in state-owned companies. But this was always likely given that rampant expenditure by the previous government …
20th November 2014
India’s financial markets have performed well over the past month. Bond yields have fallen, while the rupee has remained stable against the US$. But the big story has been in equity markets, which have surged to record highs amid signs that the …
18th November 2014
Given the recent sharp falls in global oil prices, the relatively small narrowing of India’s trade deficit in October is disappointing. A renewed slump in exports is to blame. Looking ahead, lacklustre global growth and continued domestic bottlenecks …
17th November 2014
The sharp drop in WPI inflation in October adds to evidence of fading price pressures. It also supports our long-held view that the RBI could begin to cut interest rates earlier than many seem to expect. … Wholesale Prices …
14th November 2014
The recent sharp falls in gold and oil prices could feasibly push India’s current account into surplus over the coming months. Given that India’s large external deficit made its markets among the hardest hit during last year’s “taper tantrum”, this …
13th November 2014
Today’s inflation and industrial output data were both encouraging, but policymakers will focus mainly on evidence of fading price pressures. Given this, an early start to the RBI’s policy loosening cycle still looks on the cards. … Consumer Prices (Oct.) …
12th November 2014
The recent sharp falls in local food and global oil prices are likely to have kept both consumer and wholesale price inflation subdued in October. This would strengthen our view that the RBI is likely to cut interest rates earlier than most seem to …
10th November 2014
Two recent state election victories have strengthened the position of India’s ruling party, the BJP. More importantly, with the electoral calendar now looking less busy, there is a window of opportunity over the next 12 months for the government to push …
7th November 2014
Over the medium term India’s economy could, with the right policies, sustain GDP growth of 10%.The BJP’s strong mandate following its election victory in May has raised hopes that wide-ranging structural reform will now be implemented to achieve this. In …
5th November 2014
Indian consumer price inflation fell to its slowest pace on record in September. With the latest data also pointing to continued weakness in the industrial sector, we remain of the view that interest rates are likely to be cut a lot earlier than most seem …
20th October 2014
13th October 2014
The Reserve Bank of India (RBI) left its policy rates on hold today but, given the weakness of recent activity data and the fact that inflation has fallen below the central bank’s near-term target, we think that modest policy loosening will come onto the …
30th September 2014
Today’s Q2 GDP data for India, which show that the economy grew at its fastest pace since Q1 2012, come as welcome news. But we suspect that this might be as good as it gets for some time. Both fiscal and monetary policy look set to remain tight, while …
29th August 2014
The new government’s emphatic election victory in May has lifted some of the gloom that has hung over India’s economy in recent years. We see a number of ways in which the country’s new leaders can make a difference. While there is only limited scope for …
23rd July 2014
