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Revising up our GDP forecasts India’s economy recorded solid growth in the first half of this year and continues to do so in the second half. Household consumption appears to have been robust in recent months. The RBI’s latest consumer confidence survey …
24th November 2023
India’s economy continues to show resilience this year and annual GDP growth is likely to come in stronger than the 6.3% we had been forecasting. While inflation is well within the RBI’s tolerance range, the renewed surge in food prices in November is a …
23rd November 2023
Commodity imports boosting trade deficit The men’s cricket team are soaring on the pitch, while the monthly goods trade deficit is doing so off it. Data released this week showed that it hit an all-time high of $31.5bn in October. That surpassed the …
17th November 2023
During the past decade, the global economy has transitioned out of an era in which globalisation was the key driver of economic and financial relationships into one shaped by geopolitics. Previously, most governments had believed that closer economic …
16th November 2023
This page has been updated with additional analysis since first publication. Renewed food price spike the key inflation threat Headline consumer price inflation edged down to a four-month low of 4.9% y/y in October, but that’s already old news given the …
13th November 2023
Limited fiscal impact from grain scheme extension The latest batch of state elections in India kicked off this week. Voting started in Chhattisgarh and Mizoram on Tuesday and voters will go to the polls in Madhya Pradesh, Rajasthan and Telangana over the …
10th November 2023
Urban households still feeling positive As always, we need to treat Indian labour market statistics with caution, but unemployment data from private think-tank CMIE released this week were noteworthy. They showed that the overall unemployment rate soared …
3rd November 2023
This page has been updated with additional analysis since first publication. Early sign of manufacturing activity losing momentum The manufacturing PMI survey for October suggests that activity lost some momentum at the start in Q4. We think that the …
1st November 2023
Strengthening ties with the Quad India’s government is pushing ahead with efforts to make India a key link in global manufacturing supply chains. The Cabinet this week approved a Memorandum of Cooperation with Japan on a semiconductor supply chain …
27th October 2023
Continued strong growth in unsecured lending is putting India’s banks at risk of rising defaults, a concern that is exacerbated by their relatively low loan loss absorption capacity. This raises the possibility of the sector entering a slow-burning crisis …
26th October 2023
Government is gearing towards elections Several policy measures announced by India’s government this week are likely geared towards shoring up popular support ahead of next month’s state elections and next year’s general election. The cabinet approved …
20th October 2023
India’s economy appears still to be holding up well in the second half of the year. And although inflation has dropped back sharply to within the RBI’s target range, the outlook is still clouded by uncertainties related to food prices. This is a key risk …
18th October 2023
Investment growth may have slowed in Q3 Data released this week showed that growth in industrial output accelerated from 6.0% y/y in July to 10.3% y/y in August, the fastest in more than a year. And in m/m seasonally adjusted terms, output rose from 0.2% …
13th October 2023
This page has been updated with additional analysis since first publication. CPI inflation drops to within target, but food inflation threat is far from over Headline consumer price inflation dropped back sharply to within the RBI’s 2-6% target range in …
12th October 2023
Limited macro fallout from weakening rupee The sell-off in global bond markets has caused currencies, including the rupee, to come under pressure this week. The rupee is now at 83.2/$, hovering close to record lows. It could even have posted new lows but, …
6th October 2023
The RBI kept the repo rate on hold at 6.50% today as expected and continued to strike a hawkish tone despite the recent easing in inflation. Indeed, it even raised the possibility of open-market bond sales to drain excess liquidity. There is a significant …
RBI stands firm in fight against inflation The RBI kept the repo rate on hold at 6.50% today as expected and continued to strike a hawkish tone despite the recent easing in headline inflation. There is still a significant risk of the easing cycle that we …
The sell-off in bond markets has taken a breather today, helped in part by softer data on the US labour market. However, the scale of the moves over the past week has invoked comparisons to previous financial crises that have been caused by sharp moves in …
4th October 2023
This page has been updated with additional analysis since first publication. Indian manufacturing growth cools a touch India’s manufacturing PMI moderated in September but remained high. However, there are reasons to think a further slight cooling in …
3rd October 2023
Coal stocks already at their lowest levels this year Workers affiliated with five trade unions at the state-owned behemoth Coal India are due to go on strike for three days next week (3 rd –5 th October) in dispute over wages. There is still time for the …
29th September 2023
MPC to keep rates on hold next week as recent spike in vegetable prices fades But food inflation threat is not over yet Severe El Niño could push back start of easing cycle from early 2024 We agree with consensus expectations that the MPC will keep …
The narrowing in India’s current account deficit in the four quarters to Q2 was mainly due to the shrinking of the goods trade deficit. Looking ahead, the recent jump in oil prices won’t prevent the deficit narrowing to around 1.5% of GDP this year, and …
28th September 2023
Gov’t achieves long-stated aim of bond inclusion Almost a year on from a high-profile snub , JP Morgan announced on Friday that it would be including Indian local-currency bonds in its GBI-EM Global Diversified Index for the first time. Inclusion will …
22nd September 2023
India’s economy is showing signs of coming off the boil, and core inflation is moderating. However, a surge in food prices has pushed headline CPI inflation well beyond the upper limit of the RBI’s 2-6% tolerance range. The onset of a severe El Niño and …
20th September 2023
G20 summit exceeds low expectations T he G20 managed to deliver a joint statement at its summit in New Delhi, which was deemed as something of a foreign policy triumph for Prime Minister Modi given the uncertainty ahead of the event. This owed much to …
15th September 2023
Overview – India’s economy is showing signs of coming off the boil, and core inflation is moderating. However, a surge in food prices has pushed headline CPI inflation well beyond the upper limit of the RBI’s 2-6% tolerance range. The onset of a …
13th September 2023
This page has been updated with additional analysis since first publication. Headline CPI rate drops, but food inflation threat is not over yet The drop in headline consumer price inflation in August should provide some welcome relief for the RBI. But …
12th September 2023
Geopolitics loom large over New Delhi showcase Following the success of the Chandrayaan-3 mission to the south pole of the moon in August, this weekend’s G20 summit in New Delhi will undoubtedly be presented as another foreign policy triumph by the BJP as …
8th September 2023
Vegetable price inflation still elevated The surge in tomato prices since early July has gone into reverse over the past couple of weeks and prices are now close to their levels from June. (See Chart 1.) This has been mostly due to improvements in supply …
1st September 2023
This page has been updated with additional analysis since first publication. Manufacturing PMI defying gravity, again India’s manufacturing PMI is again defying gravity, recording one of its highest readings in the past 13 years in August. It’s clear that …
This page has been updated with additional analysis since first publication. Resilient economy likely to cool a touch The GDP data for Q2 (Q1 of FY23/24) confirm a resilient first half of the year for India’s economy in the face of the RBI’s policy …
31st August 2023
BRICS expansion unlikely to challenge G7 India made history this week after its Chandrayaan-3 mission became the first to touch down on the south pole of the moon. Remaining column inches in the local press have been given to the BRICS summit in …
25th August 2023
The government’s ambition of developing a globally-competitive manufacturing sector, combined with relatively slow progress on shifting away from using coal for electricity production, means India will become the world’s biggest polluter in the …
23rd August 2023
RBI has ample FX reserves in its locker The rupee has this week continued to slide against the US dollar amid broad strength in the greenback, dropping to a record low of 83.1/$ on Thursday. The rupee’s depreciation may have been larger had the RBI not …
18th August 2023
India’s economy is showing signs of coming off the boil, and core inflation is moderating. However, the surge in food prices has pushed headline CPI inflation well beyond the upper limit of the RBI’s 2-6% tolerance range. The onset of a severe El Niño and …
17th August 2023
This page has been updated with additional analysis since first publication. An inflation shocker Headline consumer price inflation accelerated to a 15-month high of 7.4% y/y in July amid the surge in food price inflation. While the RBI expects the sharp …
14th August 2023
Upside risks to inflation still remain The RBI kept the repo rate on hold at 6.50% as expected this week and maintained a hawkish tone amid the recent surge in food prices. The Bank revised up its inflation forecast for Q3 significantly (from 5.2% to …
11th August 2023
The RBI kept the repo rate on hold at 6.50% today as expected and maintained a hawkish tone amid the recent surge in food prices. It’s unlikely that the rate hiking cycle will restart. But there is a significant risk of the easing cycle that we expect to …
10th August 2023
Government delivering on capex promise so far We noted at the time of the FY23/24 Union Budget announcement that the government appeared to be putting more emphasis on boosting longer-term prospects than had previously been the case. Capital expenditure …
4th August 2023
Jump in food prices makes rate hold next week less of a certainty On balance, we still think the MPC will stand pat but strike a more hawkish tone If food price surge is sustained, loosening may be pushed back from early 2024 The recent surge in food …
2nd August 2023
This page has been updated with additional analysis since first publication. Manufacturing PMI shows further signs of cooling activity India’s manufacturing PMI edged down in July to a three-month low, and we expect higher rates and subdued global demand …
1st August 2023
Reforms to take a back seat for now In an otherwise quiet week, the big news from the past few days is that India’s parliament has approved a no-confidence vote lodged by opposition parties against Prime Minister Modi’s BJP-led government. The motion has …
28th July 2023
Investment held up well in the first half of the year but the recent moderation in credit growth and the messages from the latest survey data suggest that it is going to enter a softer patch over the coming few quarters. Unperturbed by the cumulative …
25th July 2023
Limited impact from ban on trade and inflation We warned last week of a potential ban on rice exports in response to rising prices in some parts of the country and as a pre-emptive measure ahead of a potentially severe El Niño weather event. This week, …
21st July 2023
India's economy is showing signs of coming off the boil and, with inflation lodged within the RBI’s target range, a resumption of the tightening cycle looks unlikely. However, the onset of a severe El Niño is a looming threat and presents a key risk to …
19th July 2023
Rice export ban wouldn’t be unprecedented This week we explored the implications of a severe El Niño for India’s economy. A key point is that it could put upward pressure on rice prices, and a subsequent response by the government could be a ban on rice …
14th July 2023
This page has been updated with additional analysis since first publication. June’s CPI data already old news Headline consumer price inflation came in at 4.8% y/y in June, comfortably within the RBI’s 2-6% tolerance range. But that’s already old news …
12th July 2023
A severe El Niño event could be the harbinger of weak monsoon rains in India. This wouldn’t have as big an economic impact as it would have had a couple of decades ago. But it would harm employment and energy production. What’s more, it would push up …
10th July 2023
Vegetable price spike a key upside risk to inflation We noted in our previous Weekly that the sharp rise in vegetable prices was posing an upside risk to the inflation outlook, particularly given the large weighting of food in India’s CPI basket. Since …
7th July 2023
This page has been updated with additional analysis since first publication. Indian manufacturing growth cools India’s manufacturing PMI edged down in June after reaching a 31-month high in the previous month. (See Chart 1.) This points to slight …
3rd July 2023
