Implications of a weak monsoon

This year’s monsoon has so far been weaker than usual. This won’t have as big an economic impact as it would have a couple of decades ago. But it will harm employment and energy production. Some comfort can be taken from the fact that food inflation is likely to remain anchored even if the monsoon rains do remain low, which should allow the RBI to keep policy loose.
Darren Aw Asia Economist
Continue reading

More from India

India Economics Weekly

Reforms on the back burner, mobile tariff hikes

With key state elections coming onto the horizon, we doubt that any contentious economic reforms will be implemented during the winter session of parliament, which kicks off next week. Meanwhile, the mobile tariff hikes announced by telecoms firms this week will add to inflationary pressure. But we don't think that will spring the RBI into immediate action.     Drop-In: Why is Asia sitting out the global inflation surge? 09:00 GMT/17:00 HKT, Thursday 2nd December Drop-In: India – How much scarring will the pandemic leave? 10:00 ET/15:00 GMT, Wednesday 1st December

26 November 2021

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 Economics Weekly

Sitharaman pleads, Das reassures

Finance Minister Nirmala Sitharaman this week made an impassioned plea for the private sector to ramp up investment to support the economic recovery, but we don’t think that firms will heed her call. Meanwhile, comments from RBI Governor Shaktikanta Das support our view that policy tightening will proceed very gradually and that rate hikes won’t come onto the agenda for several more months yet.

19 November 2021

More from Darren Aw

India Data Response

Services & Composite PMI (Aug.)

The sharp rises in India’s services and composite PMI readings in August support our view that the economy has staged a strong rebound in Q3. But downside risks remain significant as the threat of further virus waves continues to loom.

3 September 2021

India Data Response

Manufacturing PMI (Aug.)

The drop in India’s manufacturing PMI in August is probably just a sign of activity normalising following the strong pace of recovery in recent months. But the threat of further virus waves remains a significant downside risk to the outlook.

1 September 2021

India Economics Weekly

Kerala concerns, Sensex surge

Headline numbers suggest that the recent virus outbreak in Kerala has been brought under control, but that seems to be in large part a reflection of a sharp fall in testing. And with vaccination coverage still low, the risk of new national virus waves continues to loom. That is probably the key risk to our view that the rally in Indian equities - which hit a record high this week - has further to run.

27 August 2021
↑ Back to top