India

India Economics Update

India Economics Update

Asset sales delay will create a fiscal hole

The postponement of the planned privatisation of two state-owned banks to next year has dealt an all-too-familiar blow to the Finance Ministry’s hopes of raising significant revenues from asset sales in FY21/22. Rather than relaxing the overall fiscal deficit target, we expect the Finance Ministry to opt to make up for the revenue shortfall by reducing spending, which would weigh on the economic recovery.

3 August 2021

India Economics Update

Wider trade deficit won’t threaten external position

The widening in India’s goods trade deficit in June came on the back of a rebound in imports amid the lifting of containment measures and the recent rally in global oil prices. But while the economic recovery has further to run, we think that oil prices will soon peak, which should help to limit external risks.

16 July 2021

India Economics Update

A closer look at India’s vaccine supply projections

The government’s latest vaccine supply projections suggest that India could fully vaccinate all adults by year end. But that hinges on optimistic assumptions about production and distribution. Unless supply and logistical issues constraining the rollout are swiftly resolved, the risk of fresh outbreaks will remain a significant threat to the recovery.

7 July 2021
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India Economics Update

How much further will inflation rise?

The recent jump in India’s consumer price inflation has taken us (and most others) by surprise and we have revised up our near-term forecasts. However, a big chunk of the surge – even in the most closely-watched core measure – can be explained by rising global commodity prices, which we think has largely run its course. Further ahead, a (likely) strong monsoon harvest and a still-large output gap should help to anchor headline inflation and relieve pressure on the RBI to tighten policy any time soon.

India Economics Update

External demand to support economy in Q2

India’s goods trade deficit narrowed to an eight-month low in May as exports held up much better than imports. Strong external demand will help to offset some of the damage to domestic demand caused by the virus surge and ramping up of containment measures this quarter.

India Economics Update

Resilient remittances will aid the recovery

Remittance flows into India have been resilient in recent months and, with employment prospects for Indian migrants looking better than a year ago, they should continue to hold up well. That should provide some much-needed support for the economic recovery.

India Economics Update

Resilient remittances will aid the recovery

Remittance flows into India have been resilient in recent months and, with employment prospects for Indian migrants looking better than a year ago, they should continue to hold up well. That should provide some much-needed support for the economic recovery.

India Economics Update

RBI will keep policy loose for a long time yet

The Reserve Bank kept the repo rate on hold at a record low today and announced plans to ramp up government bond purchases on the secondary market, underlining its commitment to supporting the recovery. With the economy likely to take time getting back to health, policy will remain accommodative for a long while yet.

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