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Economic growth has surged in recent quarters and we expect it to remain strong over the next year or so, supported by buoyant private and government consumption ahead of the general election that is due in mid-2019. Core inflation is also set to stay …
5th July 2018
Headline consumer price inflation is likely to have stayed well above target in June, due in large part to core inflation remaining elevated by the standards of the recent past. We think that this will ultimately prompt the Reserve Bank to follow up …
India’s manufacturing PMI jumped to a six-month high in June, building on the recent run of positive economic data. Looking ahead, prospects for local manufacturers remain bright over the near term. … Manufacturing PMI …
2nd July 2018
The drop in the Indian rupee to an all-time low this week has inevitably triggered comparisons with the Taper Tantrum in 2013. But we don’t think there is major cause for concern. The external position is much improved since 2013 and there are good …
29th June 2018
A sharp rise in inflation over recent months, and a jump in household inflation expectations, has raised concerns that the RBI has fallen behind the curve and is squandering its hard-won inflation-fighting credentials. By contrast, we see the RBI’s …
The Reserve Bank of India hiked its repo rate for the first time in four years earlier this month. Subsequent data showing that core consumer price inflation has risen to its highest rate since July 2014 underlined why the central bank felt it had to act. …
26th June 2018
The minutes of the Reserve Bank of India’s June policy meeting – at which interest rates were hiked – are dominated by concerns about upside risks to inflation and the potential for damage to the central bank’s recently-acquired credibility. The …
20th June 2018
India’s goods trade deficit widened in May, but should drop back over the coming months, helped by a combination of easing oil prices and restrictions on gold imports. India isn’t particularly exposed to a more protectionist US – exports to the US are …
15th June 2018
Policymakers don’t put much weight on the wholesale price measure of inflation, but the fact that it accelerated in May and looks set to remain elevated suggests that the RBI will follow up this month’s rate hike with further tightening over the coming …
14th June 2018
There was a widening in India’s current account deficit in Q1 over a four-quarter sum, but the bigger picture is that the external shortfall remains at a sustainable level. In addition, FDI inflows have picked up. Given this, the economy should still be …
13th June 2018
Consumer price inflation rose to a four-month high in May and, with core inflation in particular set to remain elevated, we think the RBI will follow up last week’s hike in the repo rate with further modest policy tightening over the coming months. … …
12th June 2018
Consumer price inflation is likely to have accelerated in May, due in large part to a rise in fuel inflation. Core inflation will also have remained elevated, and this is likely to be the case for some time. We think that this will ultimately prompt the …
7th June 2018
The Reserve Bank of India’s (RBI’s) decision to hike its repo rate today surprised the consensus, but not us. We think that elevated core inflation will prompt the central bank to raise interest rates further over the coming months. … RBI pulls the …
6th June 2018
The government’s record privatisation target set for this year is dependent in part on a smooth sale of a large stake in Air India. But with no firms having shown any serious interest in making a bid, this seems very unlikely. As a result, we think the …
5th June 2018
India’s manufacturing PMI edged down in May. But the reading is still decent, and prospects for local manufacturers look relatively bright over the near term. … Manufacturing PMI …
1st June 2018
The consensus is expecting the Reserve Bank of India (RBI) to keep rates on hold at the upcoming meeting that concludes on Wednesday 6th June. But the hawkish tone of the previous meeting’s policy minutes, and the deterioration in the inflation picture …
31st May 2018
Indian GDP growth surged to a two-year high in Q1. The data are much-maligned, but the broad trajectory of a pick-up in growth seems reasonable, and we think that growth will remain strong over the coming quarters. … GDP …
After a few teething problems in its early stages, India’s new bankruptcy code is now making a significant difference to the speed at which bankruptcy cases are resolved and the amount that creditors are able to recover. In turn, this is relaxing a …
25th May 2018
The BJP’s failure to form a coalition despite winning by far the most seats in the Karnataka state election is a setback for the ruling national party, with the main opposition Congress and the local Janata Dal (Secular) parties now set to form an …
23rd May 2018
The slide in the rupee since the start of the year has raised concerns in some quarters over a repeat of the “Taper Tantrum”, which began five years ago today. But this seems unlikely. The external position is much improved since 2013 and, in fact, there …
22nd May 2018
India’s goods trade deficit held steady in April, and we think it will remain comfortable over the coming months despite the recent ramping up of trade-related attacks by the US. … Trade deficit to remain in …
16th May 2018
A strong showing in the Karnataka state election suggests that Prime Minister Modi’s BJP retains significant goodwill among the electorate. Mr Modi’s record to date suggests that he will continue to shy away from the most difficult – but potentially most …
15th May 2018
In the context of the hawkish tone of the RBI’s latest policy minutes, the large jump in core CPI inflation last month paves the way for a rate hike at the central bank’s next policy meeting in June. … Consumer Prices …
14th May 2018
Policymakers don’t put much weight on the wholesale price measure of inflation, but the fact that it accelerated in April nevertheless supports our view that policy tightening is likely this year. A particularly sharp pick-up in consumer price inflation …
Indian industrial production growth slowed in March, but the rate of growth is still reasonably healthy and the sector appears to have performed well across Q1 as a whole. Looking ahead, prospects for local industry remain relatively upbeat over the near …
11th May 2018
The trend of political parties in India promising loans waivers to farmers ahead of state elections seems increasingly well entrenched. As a result, the fiscal costs are continuing to mount. We estimate that the loan waivers already announced are …
9th May 2018
Consumer price inflation is likely to have risen in April, due in large part to a rise in fuel inflation. Core price pressures are also continuing to build. We are one of only a handful of forecasters expecting the RBI to tighten policy before the end of …
8th May 2018
In India’s decentralised political system, state elections such as the upcoming vote in Karnataka can have a direct bearing on economic policy. Arguably more significant though, a convincing performance for Prime Minister Modi’s BJP in Karnataka would …
4th May 2018
India’s manufacturing PMI edged up in April, suggesting that the sector strengthened a touch at the start of Q2. Looking ahead, prospects for local manufacturers look relatively bright over the near term. … Manufacturing PMI …
2nd May 2018
The government announced over the weekend that it has successfully managed to electrify all villages in India, meeting its deadline of 1st May 2018 that it set three years ago. But in reality, a large chunk of the population still lacks reliable access to …
30th April 2018
Remittance inflows are an important source of external funding for India, and were equivalent to 3% of GDP in 2017 – larger than FDI and portfolio inflows combined. Though there are some risks, remittance inflows look set to remain strong over the coming …
27th April 2018
Indian GDP growth hit a five-quarter high in Q4 2017, and various indicators suggest that the economy strengthened further in the first quarter of 2018. Industrial production growth last quarter may have been stronger than at any time since 2011, while …
24th April 2018
Over the past month, there have been significant gyrations in India’s bond market. A drop in yields in the first half of April has been followed by a sharp jump more recently, exacerbated by a hawkish set of RBI policy minutes last week. Looking ahead, we …
23rd April 2018
The minutes of the Reserve Bank of India’s April policy meeting show that, despite the recent drop in headline inflation, the MPC is still concerned about the upside risks to the outlook. … MPC minutes highlight upside risks to …
20th April 2018
The government has set an ambitious privatisation target for FY18/19, emboldened by exceeding target last year. But meeting this year’s target is dependent on a smooth sale of a large stake in Air India, which seems unlikely. If the privatisation target …
17th April 2018
Headline wholesale price inflation held steady in March. But with core price pressures still elevated, we remain comfortable with our view that policy rate hikes are likely later this year. … Wholesale Prices …
16th April 2018
India’s trade deficit widened in March, but we think it will still remain comfortable over the coming months despite the recent ramping up of trade-related attacks by the US. … External deficit in check amid rising trade …
The slight drop in consumer price inflation in March was due to another decline in food and fuel inflation. Core inflation picked up and is likely to accelerate further. As such, we remain comfortable with our view that interest rate hikes are likely this …
12th April 2018
India has not been spared the recent ramping up of trade-related attacks by the US, with the most notable action so far being the challenge to India’s use of export subsidies at the WTO. However, India is unlikely to be a labelled a “currency manipulator” …
11th April 2018
A bigger corporate bond market in India could reduce local firms’ heavy reliance on bank loans to obtain funding and improve the pricing of risk, which would have knock-on benefits for the banking sector. Recent moves to lift restrictions on foreign …
10th April 2018
Early forecasts of “average” levels of rainfall during this year’s monsoon have led to a rush of speculation on the potential economic impact. But the early forecasts are prone to revision and, in any case, the monsoon matters less to growth and inflation …
9th April 2018
Consumer price inflation is likely to have eased in February, due to a further drop in food inflation. But core price pressures are still building. We think this will ultimately prompt the Reserve Bank to begin tightening policy over the coming months, …
6th April 2018
The RBI’s decision to hold its repo rate at 6.00% today came as no surprise. But we think that elevated core inflation and looser fiscal policy will prompt the central bank to raise interest rates in the second half of the year, much sooner than the …
5th April 2018
India’s manufacturing PMI edged down in March, following the trend across most of Asia. But we doubt this marks the start of a sharp downturn. In fact, over the near term at least, prospects for local manufacturers look relatively bright. … Manufacturing …
3rd April 2018
The Reserve Bank of India (RBI) looks set to keep its policy rates on hold at the meeting that ends on Thursday 5th April. But we think that elevated core inflation and looser fiscal policy will prompt the central bank to raise interest rates before too …
29th March 2018
After taking a significant hit in the aftermath of demonetisation in late 2016, India’s rural economy has regained momentum in recent months. Future prospects for the rural economy look bright, in large part because, with political considerations in mind, …
28th March 2018
There has been much focus over the past month on the shift towards greater trade protectionism by the US, and yet arguably the most significant development from India’s perspective was the action by the US to challenge India’s export subsidy schemes at …
23rd March 2018
Indian equities have continued to drop so far in March, even as many other major stock markets have stabilised after the turbulence in February. Looking ahead, we expect Indian equities to fall a bit further over the next 18 months or so. … Equities …
22nd March 2018
A drop in foreign direct investment inflows and a pick-up in portfolio inflows into India has led to concerns that the economy is once again becoming vulnerable to a sudden halt in foreign financing. But FDI inflows are likely to recover and, more …
21st March 2018
India is one of many economies facing a more protectionist stance from the US. Its dependence on exports to the US is low though, an inadvertent positive stemming from its failure to develop a world-beating manufacturing sector. … Trade deficit stabilises …
15th March 2018
