India Economics Update RBI’s loosening cycle has further to run The Reserve Bank delivered a (slightly) larger-than-expected rate cut today and has left the door open for further easing. If soft surveys are correct in suggesting that there is limited slack in the... 7th August 2019 · 3 mins read
India Economics Update Investment slump has bottomed out Investment growth collapsed to a near four-year low in Q1. While a spectacular rebound will remain elusive, investment should recover gradually over the coming quarters as election-related uncertainty... 5th August 2019 · 2 mins read
India Economics Weekly Fiscal deficit target doubtful, banking code amended India’s fiscal deficit in Q1 of FY19/20 provides little assurance about the government’s ability to meet the 3.3% target that it set in the union budget last month. We think that the finance ministry... 2nd August 2019 · 5 mins read
India Data Response Manufacturing PMI (Jul.) India’s manufacturing PMI reading for July is consistent with decent output in the sector at the start of Q3. But this won’t be a barrier to further monetary easing, and we’ve pencilled in another... 1st August 2019 · 2 mins read
RBI Watch Under the wings of doves The MPC – now even more firmly under the control of doves following the recent surprise resignation of Viral Acharya – is likely to use the current low rate of headline inflation as justification for... 31st July 2019 · 7 mins read
India Economics Update Gold price rally won’t hurt external position Gold prices have hit a record high in rupee terms in recent weeks, surpassing the previous peak in 2012 when India was on the brink of a balance of payments crisis. But a drop in underlying demand for... 30th July 2019 · 3 mins read
India Economics Weekly Acharya steps down, labour reform bills tabled Dr Viral Acharya, who stepped down from the MPC this week, was one of the most hawkish members of the committee. As such, his departure boosts the chances of further rate cuts in the near term. But it... 26th July 2019 · 4 mins read
India Economics Update Back to the future for FDI policy Measures announced during this month’s union budget to ease restrictions on foreign direct investment into India should help to assuage concerns that policymakers have embraced a more insular view on... 24th July 2019 · 3 mins read
India Chart Pack Equities have further to fall Indian equities have dropped by over 3% so far in July (see Chart 1), even as most other Asian equities have held up reasonably well this month. The drop appears to have been triggered by proposals in... 23rd July 2019 · 9 mins read
India Economics Weekly A little sinning would do no harm Borrowing in foreign currency has been at the root of virtually every major EM sovereign debt crisis, which is why it gets called the “original sin” of emerging economies. It is unsurprising... 19th July 2019 · 3 mins read
India Economics Update How credible is the asset sales target? The government’s hopes of hitting the record asset sales target that has been set in the budget for FY19/20 appear to be dependent on the smooth sale of a large stake in Air India. That seems unlikely... 17th July 2019 · 3 mins read
India Economics Update Trade deficit to remain in check India’s merchandise trade deficit narrowed for the first time in five months in June. Looking ahead, a limited exposure to a more protectionist US, as well as low oil prices, will help to keep the... 16th July 2019 · 2 mins read
India Data Response Wholesale Prices (Jun.) The wholesale price index is not the preferred measure of inflation for India’s policymakers, but the continued decline in the headline rate in June will help the MPC to justify another rate cut at... 15th July 2019 · 2 mins read
India Data Response Consumer Prices (Jun.) & Industrial Production (May) Consumer price inflation in India rose last month but the headline rate remains below the RBI’s target, while core inflation is no major concern. An August rate cut is almost certain. 12th July 2019 · 2 mins read
India Economics Weekly (Another) fraud scandal at PNB, vehicle sales slump The latest fraud scandal engulfing Punjab National Bank – one of India’s largest state-owned banks – is a stark reminder that recent measures to revive the banking sector need to be supplemented with... 12th July 2019 · 5 mins read
India Economic Outlook Policy loosening risks stoking inflation Policy support has been stepped up in recent months and, with further easing set to follow, growth should gradually recover from the slowdown in Q1. In fact, the risk now is that policy loosening goes... 9th July 2019 · 20 mins read
