Manufacturing PMI (Nov.)

The jump in India’s manufacturing PMI in November suggests that the recovery is still ongoing, although it appears that global supply shortages have remained a drag. And with vaccination coverage in India still low, the threat of new virus outbreaks – either of the Omicron variant or potential successors – will continue to loom. Drop-In: India – How much scarring will the pandemic leave? 10:00 ET/15:00 GMT, Wednesday 1st December Drop-In: Why is Asia sitting out the global inflation surge? 09:00 GMT/17:00 HKT, Thursday 2nd December
Darren Aw Asia Economist
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India Economics Weekly

Encouraging signs in state-level virus data

COVID infections have been falling in parts of India over the past week, particularly in those areas that were first to report Omicron waves. We’re hopeful that this is a sign of things to come, and wouldn’t be surprised if India’s third wave had largely subsided by the time the RBI next meets in early February.

21 January 2022

India Economic Outlook

On the cusp of policy tightening

India’s Omicron wave should only be a temporary setback to the economic recovery. As long as recurrent large waves of COVID are avoided, we think that economic growth will be faster this year than last. We also think that inflation will soon start to worry the RBI. Consequently, policy rates will be hiked by more than most anticipate.

19 January 2022

India Economics Weekly

Omicron surging, asset sales progressing

COVID-19 cases in India are still surging. But the early indications are that healthcare systems are not under significant pressure, and we’re hopeful that India’s third wave will peak before long. Even if it doesn’t, the better-than-expected fiscal performance over recent months means that there is policy space for the government to intervene.  

14 January 2022

More from Darren Aw

India Chart Book

Backsliding on reforms?

The repeal this month of controversial reforms aimed at liberalising the agriculture sector is arguably the biggest political setback that the Modi government has faced since coming to power in 2014. And while the direct economic impact of abandoning those reforms is limited, the bigger concern is the signal that it sends about the prospects for other contentious reforms that could make a substantial difference to economic growth over the long term. Ahead of a major election early next year in Uttar Pradesh – India’s most populous state with the largest representation in the Rajya Sabha – the ruling BJP is now highly likely to shelve reforms on the labour market that would face stiff popular opposition. A poor performance from the BJP in that election may derail the reform agenda for even longer.

24 November 2021

India Data Response

Wholesale Prices (Oct.)

The jump in headline wholesale price inflation in October was due almost entirely to higher commodity prices, but we think they are now close to peaking. While the RBI will be wary that wholesale prices remain elevated, there’s still scope to keep policy accommodative given the much lower rate of headline CPI inflation.

15 November 2021

India Data Response

Consumer Prices (Oct.) & Industrial Production (Sep.)

India’s consumer price inflation edged up in October but remained well below the 6% ceiling of the RBI’s inflation target range. And we expect it to stay there for several months yet, which underpins our view that policy tightening is still some way off.

12 November 2021
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