India Economics Weekly

India Economics Weekly

Domestic needs limit prospects for vaccine exports

India is planning to resume exporting COVID-19 vaccines from October, which should help to further boost the trade position. But with vaccination coverage still low, the domestic vaccine rollout will continue to take priority. Vaccine shipments from India therefore won’t be enough to shift the needle for rollouts in other poor EMs.

24 September 2021

India Economics Weekly

Telecoms lifeline, autos constraints, bank liquidity

India's struggling telecoms firms were thrown a lifeline this week after parliament approved a four-year moratorium on dues owed to the government. One potential consequence is that telecoms firms are required to raise prices in order to lift revenues, which would boost inflation. Meanwhile, global semiconductor shortages have been weighing on India's auto sector, which will prove a headwind to the broader industrial recovery.

17 September 2021

India Economics Weekly

Vaccine rollout accelerates, MSP hikes muted

India’s vaccine rollout has shifted into a higher gear over the past couple of weeks, but the slow start means that it would still take several months before a large majority of the population is fully vaccinated. Meanwhile, the annual Minimum Support Price increases for winter crops announced by the government this week are small and will only have a limited impact on both rural wage and food inflation.

10 September 2021
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India Economics Weekly

Taking stock of our GDP forecasts

Much of the coverage of this week's Q2 GDP release highlighted the record y/y growth rate, but that was due to the slump last year rather than recent economic strength. We estimate that GDP dropped by 12% q/q in seasonally-adjusted terms. That large fall in GDP means there is more scope for the economy to have rebounded sharply in Q3. But taken as a whole, we've revised down our annual growth forecast for 2021 to 8%.

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.

India Economics Weekly

The broad contours of policy normalisation

We’ve argued for some time that the RBI is in no rush to join several of its emerging market peers in tightening monetary policy, a view that has been reinforced by the dovish commentary in the latest RBI bulletin released this week. The bulletin also hints that, whenever it does begin, policy normalisation will be very gradual. We think it will start with the slow removal of liquidity support before rates are increased.

India Economics Weekly

Vaccine rollout struggling for momentum

Concerns continue to build over a new virus wave in India and adding to the worry is the sluggish pace of the vaccine rollout. The government has this week taken steps to boost supply, but they are unlikely to bring forward by much the point at which enough people are fully vaccinated to mitigate the damage of a fresh outbreak.

India Economics Weekly

Relapse risks rising

Economic activity has been recovering quickly since the second virus wave abated. But we've argued for some time that the rapid reopening increases the risk of new outbreaks. That threat is building: new infections have risen in a handful of states over the past couple of weeks, most notably in Kerala. It’s too early to tell if this is the start of a new national virus wave, but the threat to the recovery is clear.

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