India Economics Update Markets take Fed rate hike in their stride Financial markets in India have taken last week’s decision by the US Fed to hike interest rates for the first time in a year in their stride. A bigger test might come if the Fed now tightens more... 20th December 2016 · 1 min read
India Economics Update Export rebound continues, but government target too ambitious Trade data for November show that export values continued to recover last month. Looking ahead, export growth should remain positive, but the government’s target of nearly doubling export values from... 16th December 2016 · 1 min read
India Economics Update Balance of payments position remains secure The narrowing in India’s current account deficit over a four-quarter sum in Q3, along with another rise in net FDI inflows, leaves the economy looking well-placed to cope in the event of a renewed... 14th December 2016 · 1 min read
India Economics Update Demonetisation could boost inflation over longer term We think that consumer price inflation dropped in November as the government’s demonetisation measures are likely to have led to some price discounting. However, demonetisation could boost inflation... 9th December 2016 · 1 min read
India Economics Update RBI looks complacent while waiting for clarity on demonetisation Having previously shown that it was willing to prioritise growth even at the risk of missing targets for inflation, the RBI’s decision today to keep interest rates on hold despite the downside risks... 7th December 2016 · 1 min read
India Economics Update What next for the rupee? Markets largely shrugged off the recent fall in the rupee to a record low against the US dollar, and were right to do so. With other EM currencies also weakening and inflation higher in India than... 30th November 2016 · 1 min read
India Economics Update Demonetisation sparks further bond market rally The government’s surprise demonetisation announcement has led to a sharp rise in bank deposits over the past couple of weeks. The rush of liquidity in the system has led to a fall in interbank rates... 21st November 2016 · 1 min read
India Economics Update Assessing the early impact of demonetisation Despite many anecdotal reports of turmoil in the wake of last week’s surprise demonetisation, and undoubted hardship for many, the early evidence suggests that the economic impact of the move has been... 18th November 2016 · 1 min read
India Economics Update External position healthy despite wider trade deficit Although the monthly trade deficit widened a touch in October, a number of factors should keep it in check over the coming months. This should keep India’s financial markets relatively secure in the... 15th November 2016 · 1 min read
India Economics Update PM Modi steps up anti-corruption drive The announcement late yesterday that India’s two largest denominations of banknotes have ceased to be legal tender with immediate effect is likely to weigh on economic activity in the near term, with... 9th November 2016 · 1 min read
India Economics Update Drop in food inflation has run its course Consumer price inflation is likely to have edged up in October, as the recent sharp slowdown in food inflation appears to have bottomed out. But with the central bank focused on supporting growth, the... 7th November 2016 · 1 min read
India Economics Update GST begins to take shape Confirmation that a consensus has been reached on the various rates of the new Good and Services Tax (GST) marks another important step towards its implementation. A multi-tiered GST is far from... 4th November 2016 · 1 min read
India Economics Update Government likely to miss privatisation target With more than half of the fiscal year over, the government’s aim of raising nearly INR600bn through asset sales of various state-owned companies looks unrealistic. Faced with a number of state... 2nd November 2016 · 1 min read
India Economics Update Revisiting the NPL problem Another sharp rise in the non-performing loan (NPL) ratio in Q2 and recent stark warnings from the IMF have refocussed attention on India’s ailing banking sector. The Reserve Bank of India (RBI) has... 28th October 2016 · 1 min read
India Economics Update Bond market boosted by dovish RBI Indian bonds have continued to rally this month after the Reserve Bank of India (RBI) delivered a surprise rate cut and left the door open for further loosening. However, we fear that policy could be... 20th October 2016 · 1 min read
India Economics Update What does the new estimate of the neutral rate tell us? While the RBI is probably correct in suggesting that global neutral interest rates have fallen, this does not necessarily mean that India’s own neutral rate has fallen too, as the RBI suggested when... 19th October 2016 · 1 min read
