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The passage of a long-awaited Goods and Service Tax (GST) yesterday by India’s parliament is arguably one of the country’s most important economic reforms of the past couple of decades and should providean important boost to the country’s growth …
4th August 2016
July’s consumer price inflation data is likely to show that the headline rate edged down but remained some way above the Reserve Bank’s 5.0% target for March 2017. Suggestions from many commentators that a strong monsoon this year would lead to a …
India’s manufacturing PMI edged up in July, but the reading remained lacklustre by past standards. The big picture is that local manufacturers continue to face significant structural constraints. … Manufacturing PMI (Jul. …
3rd August 2016
Governor Raghuram Rajan has had a penchant for shocking financial markets during his three years at the helm of the Reserve Bank of India (RBI), but we doubt that there are any surprises in store when he delivers his final policy announcement on 9 th …
2nd August 2016
GDP data due at the end of August are likely to show that India’s economy continued to perform impressively in Q2, with the services sector remaining the key driver of growth. But we, and many others, are sceptical about the accuracy of the national …
29th July 2016
A jump in domestic production and fall in imports of coal this year have led some to suggest that thegovernment is on track to meet its target of doubling output from end-2014 levels by 2020. But the sectorcontinues to face longer-term challenges that put …
27th July 2016
The government’s announcement this week that it will inject more capital into local banks is a positive step, but the amount is still too limited to revive the ailing sector. … Capital injections too small to revive banking …
22nd July 2016
Indian bond yields have recently fallen to their lowest levels since 2013, in large part due to anticipation that the successor to Governor Raghuram Rajan at the RBI will be more dovish. But with the RBI facing a tough challenge in meeting its inflation …
21st July 2016
Trade data for June showed positive growth in export values for the first time since the end of 2014. But with progress on the reforms needed to create a vibrant export sector still slow, the government’s ambition to nearly double export values from …
18th July 2016
Wholesale price inflation rose sharply in June, and looks set to accelerate further over the coming months. This reinforces our view that there is little scope for further monetary loosening. … Wholesale Prices …
14th July 2016
Indian consumer price inflation held steady in June, but it remains some way above the RBI's target for March 2017. As such, the scope for further monetary loosening still looks very limited. … Consumer Prices (Jun.) & Industrial Production …
12th July 2016
We think that Indian consumer price inflation dropped in June, but it is likely to have remained some way above the Reserve Bank’s 5.0% target for March 2017. There is little reason to think that further rate cuts are imminent. … Inflation to slow but …
Recent changes to the composition of the Rajya Sabha have raised the likelihood that the long-awaited Goods and Services Tax (GST) bill will finally be passed. But there are still sticking points, the most significant being the rate at which the GST is …
5th July 2016
India's manufacturing PMI rose in June, but the reading remained lacklustre by past standards. The big picture is that local manufacturers continue to face significant structural constraints. … Manufacturing PMI …
1st July 2016
Measures announced last week to further ease restrictions on foreign direct investment into India should help at the margins to build on one of the main policy successes of the Modi government so far. But the government may now have picked all of the …
29th June 2016
Following the announcement earlier this month from Reserve Bank of India (RBI) Governor Raghuram Rajan that he will be stepping down at the end of his first term in September, speculation has been rife over who will succeed him. In this Watch , we profile …
27th June 2016
A vote by the UK to leave the European Union in tomorrow's referendum would be unlikely to have much impact on India's economy. Indian exports to the UK are equivalent to less than 0.5% of GDP, so even a sharp slowdown in demand from the UK, which we …
22nd June 2016
Th e market fallout from RBI Governor Raghuram Rajan’s announcement that he will step down at the end of his current contract in September has so far been limited to a slight drop in the rupee and a small rise in bond yields. The long-term market impact …
21st June 2016
The announcement from RBI Governor Raghuram Rajan that he will stand down at the end of his current contract in September is likely to put local financial markets under pressure in the near term. However, the long-term market impact will depend on who is …
20th June 2016
The narrowing in India’s current account deficit in Q1, along with another rise in foreign direct investment inflows, leaves the economy looking well placed to weather any sudden shifts in global risk appetite over the coming months. … BoP data show …
17th June 2016
India's trade data for May suggest that the prolonged contraction in exports in US dollar terms has almost run its course. But with progress on the reforms needed to create a vibrant export sector still slow, the government’s ambition to nearly double …
16th June 2016
The sharp rise in wholesale price inflation in May reinforces our view that there is little scope for further monetary loosening. … Wholesale Prices …
14th June 2016
The rise in India’s consumer price inflation last month pushes it further above the RBI’s target for March 2017. This supports our view that there is no further scope for policy loosening. … Consumer Prices …
13th June 2016
Today’s industrial production data suggest, in stark contrast to the upbeat message from the rocketing GDP figures, that Indian industry is still in the doldrums. … Industrial Production …
10th June 2016
Consumer price inflation is likely to have dropped in May, but not by enough to bring it below the RBI’s 5.0% target for March 2017. … Drop in inflation not enough to prompt rate …
8th June 2016
The Reserve Bank of India (RBI) kept its repo rate on hold at 6.50% today and, while the consensus is expecting further modest loosening later this year, we think that rates will remain unchanged throughout the rest of 2016 and 2017. … RBI holds rates, …
7th June 2016
The Reserve Bank of India (RBI) has cut its repo rate by 150bp since the start of last year, but we believe that it will now keep rates on hold not just at next week’s policy meeting but for the rest of 2016. To the extent the RBI does want to see further …
2nd June 2016
India's manufacturing PMI edged up in May, but the reading remained lacklustre. The big picture is that local manufacturers continue to face significant structural constraints. … Manufacturing PMI …
1st June 2016
There is some evidence that India’s economy has picked up speed recently but today’s remarkably strong GDP data are hard to believe. … GDP …
31st May 2016
The sharp rise in non-performing loans (NPLs) in Q1 does not indicate that there has been a sudden deterioration in asset quality in India, but instead suggests a greater recognition of stressed assets in the banking system that have been wilfully ignored …
30th May 2016
Two years on from his inauguration, Prime Minister Narendra Modi has arguably just enjoyed his most successful month in office. For a start, PM Modi's BJP secured two important legislative victories in the latest session of parliament. The first was the …
25th May 2016
The Indian rupee has weakened against the US dollar over the past month and, with the US Fed likely to tighten policy again over the coming months, the currency could depreciate a little more . But given the big improvement in India’s current account …
24th May 2016
Regional parties have dominated the state elections held over the past month, but there has also been an apparent strengthening of support for Prime Minister Narendra Modi’s BJP at the local level. On balance, the results should help at the margin to ease …
19th May 2016
Recent amendments to the tax treaty between India and Mauritius - the terms of which have made Mauritius the leading source of foreign investment into India - are likely to bring more benefits than costs to the Indian economy over the coming years. The …
17th May 2016
Indian wholesale price inflation rose sharply in April and returned to positive territory for the first time in 18 months. This reinforces our view that there is little scope for further monetary loosening. … Wholesale Prices …
16th May 2016
India’s monthly trade deficit narrowed to a five-year low in April. With a number of factors likely to keep commodity imports in check, the overall current account position is unlikely to return as a source of vulnerability any time soon. … Import …
Indian consumer price inflation rose above the Reserve Bank’s target for March 2017 last month, supporting our view that the scope for further loosening is very limited. … Consumer Prices (Apr.) & Industrial Production …
12th May 2016
The Lok Sabha’s vote in favour of an overhaul of India’s archaic bankruptcy laws is a step towards creating a more friendly business environment and easing constraints in the banking sector. What’s more, in contrast to many other issues, partisan politics …
10th May 2016
We think that consumer price inflation held steady April as the recent slowdown in food inflation appears to have run its course. With inflation only just below the RBI's 5.0% target for March 2017 and likely to edge up over the coming months, there …
5th May 2016
We think that consumer price inflation held steady April as the recent slowdown in food inflation appears to have run its course. With inflation only just below the RBI's 5.0% target for March 2017 and likely to edge up over the coming months, there is …
The drop in India's manufacturing PMI in April provides another reminder that local industry continues to face significant headwinds. … Manufacturing PMI …
2nd May 2016
Early forecasts of a stronger-than-normal monsoon in India this year have raised hopes of a boost to GDP growth and a drop in inflation as agricultural production gets ramped up. But the early forecasts are prone to revision and, in any case, there are a …
28th April 2016
Indian media has been awash with reports that RBI Governor Raghuram Rajan might not have his contract renewed when his term expires in September. In the unlikely case that this occurs, financial markets in India could come under pressure. The extent of …
25th April 2016
Recent policy tweaks from the RBI should help at the margins to boost bank lending, which has been moribund over the past few years. Most obviously, the 25bp rate cut this month means that the repo rate has now fallen by 150bp since January 2015. In …
22nd April 2016
Yields on India's local currency debt have fallen so far in April to their lowest in nearly three years. But with the scope for further monetary loosening now looking limited, we think that yields are more likely to edge up than fall further over the …
21st April 2016
The narrowing in India's trade deficit to a six-year low in FY15/16 is welcome news, but this masks the fact that exports slumped by over 15% last year. With progress on the reforms needed to create a vibrant export sector still slow, the government’s …
19th April 2016
Recent concerns over a potential market sell-off when the Reserve Bank‘s FX swap facilities, unveiled during the 2013 “taper tantrum”, mature have been overstated. For a start, the RBI has already confirmed that maturing swaps have been covered by …
18th April 2016
Wholesale price inflation was virtually unchanged in March but, looking ahead, we think that it will return to positive territory over the next couple of months. … Wholesale Prices …
Following years of weakness, there are signs that private consumption in India is finally finding its feet. Cyclical factors such as looser monetary policy should help to support the nascent recovery over the coming months. However, slow progress on …
14th April 2016
The drop in Indian consumer price inflation in March is likely to fuel talk of more interest rate cuts, but we think that the scope for further loosening still looks very limited. … Consumer Prices (Mar.) & Industrial Production …
12th April 2016
