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Having already made a good start to 2015, India’s financial markets have rallied further following the RBI’s decision to cut interest rates at an unscheduled meeting last week. Bond yields have dropped, while equity markets have regained their poise after …
20th January 2015
Prime Minister Modi’s use of four executive orders since the end of December has added some impetus to the reform agenda, which has arguably seen the biggest strides made in areas of tax and foreign investment. But progress on relieving some of the more …
19th January 2015
Following the RBI’s decision to cut interest rates at an unscheduled meeting earlier today, data showing that the trade deficit narrowed in December underline that the central bank has scope to loosen policy further over the coming months … Trade …
15th January 2015
The RBI has shocked markets by cutting its policy rates at an unscheduled meeting today, much sooner than most had expected. Given the weakness of the economy and recent falls in inflation, we maintain our forecasts that the repo and reverse repo rates …
Wholesale price inflation edged up in December, but the big picture is that it remains close to five-year lows. What's more, our proxy for core WPI dropped sharply last month, suggesting that domestic demand remains weak. … Wholesale Prices …
14th January 2015
The rise in consumer price inflation in December was due in large part to price falls a year ago rather than any increases recently. The more significant point is that inflation remains subdued by past standards and well within the RBI’s near term …
12th January 2015
Consumer price inflation is likely to have edged up in December as the unwinding of favourable base effects from food inflation more than offset the impact of tumbling oil prices and weak core price pressures. But the bigger picture is that inflation …
9th January 2015
The end to strike action in India’s coal sector three days earlier than planned should ensure a quick resumption to normal production levels, which will reduce the risk of blackouts in the near term. But the strikes are another illustration of the …
8th January 2015
In our first Watch of 2015, we outline the prospects for India’s economy over the coming year. Falling commodity prices should brighten the outlook by providing a boost to consumer spending and helping to improve the fiscal position. Meanwhile, a …
7th January 2015
On the face of it, 2014 has been another disappointing year for the Indianeconomy. Growth over the first three quarters averaged just 5.2% y/y, only asmall improvement from the trough of 2012-2013 and still far below the ratesachieved in the prior decade. …
18th December 2014
India has not been immune to the turbulence that has hit EM markets over the past few days in the wake of the unfolding crisis in Russia. This has led to suggestions that the RBI is now likely to delay policy loosening. But local market moves have been …
17th December 2014
The recent sharp slowdown in inflation, combined with dovish commentary from the RBI in its policy review earlier this month, have prompted India’s financial markets to price in the rising likelihood of imminent rate cuts. Most notably, local bond yields …
16th December 2014
India’s trade deficit widened in November as a pick-up in exports wasn’t enough to offset a renewed surge in gold imports. But the overall deficit still remains at sustainable levels, and should remain in check over the coming months as the fall in global …
15th December 2014
Wholesale price data for November out today provide more evidence of disinflationary pressures following the release of last month’s CPI data on Friday, and build on the case for the RBI to begin cutting interest rates early next year. … Wholesale …
Today’s data show that consumer price inflation dropped to its slowest pace on record in November. With the latest numbers also showing continued weakness in industrial output, the case for policy loosening early next year is becoming ever more …
12th December 2014
The likely part-privatisation of Coal India early next year shows that there is some appetite within government to reform the sector. But this is only a small step towards addressing a myriad of problems affecting India’s coal industry. Until wider …
11th December 2014
Continued steep declines in food and fuel prices, as well as subdued core pressures, mean that consumer price inflation is likely to have dropped to a record low in November. This should bolster calls for the RBI to begin cutting interest rates early next …
9th December 2014
Data released today show that India’s current account deficit widened again in Q3, but we doubt that policymakers will be too concerned. … Current Account …
8th December 2014
The decision this week to lift restrictions on FDI into the construction sector is another indication of the government’s willingness to address India’s investment needs. But even so, there is still a disappointing lack of progress in liberalising larger …
5th December 2014
India is one of the world’s largest net importers of oil, but the sharp fall in global oil prices is unlikely toboost the economy by as much as might be expected. Retail prices haven’t fallen by much as thegovernment is hiking fuel taxes. The government …
3rd December 2014
RBI Governor Raghuram Rajan kept both the repo and the reverse repo rates on hold at 8.00% and 7.00% respectively today, but the accompanying statement suggests that rate cuts are likely as soon as at the next policy review. … RBI holds fire, but paves …
2nd December 2014
India’s manufacturing PMI increased in November, but conditions are still subdued by past standards. Looking ahead, with progress on creating a favourable business environment remaining slow, the sector looks set to struggle for some time to come. … …
1st December 2014
The RBI today announced the removal of restrictions on gold imports, and the withdrawal of the “20:80” rule which dictates that 20% of gold imports must be re-exported. There are no further details or statements so far and some are speculating that the …
28th November 2014
Q3 GDP data released today underline that the economy has remained lacklustre in the early stages of PM Modi’s tenure, and add to the case for the RBI to begin cutting interest rates as soon as at next week’s policy review. … GDP …
The government’s reform agenda has recently gathered momentum, but progress in a number of the most important areas has so far been underwhelming. Breakthroughs in some of these areas should be matters of priority in this year’s winter session of …
27th November 2014
Markets seem certain that the RBI will keep interest rates on hold next week, but we are not so sure. Inflation has fallen much further than most had expected, GDP growth is still weak by past standards, current account vulnerabilities have declined, and …
26th November 2014
The surge in the Sensex stock index to an all-time high in November has come amid signs that Prime Minister Modi is now more willing to push through wideranging reform following the BJP’s decisive victories in two key state elections last month. …
24th November 2014
India looks set to miss its fiscal target this year, even in the optimistic case that the government fully delivers on its plans to sell stakes in state-owned companies. But this was always likely given that rampant expenditure by the previous government …
20th November 2014
India’s financial markets have performed well over the past month. Bond yields have fallen, while the rupee has remained stable against the US$. But the big story has been in equity markets, which have surged to record highs amid signs that the …
18th November 2014
Given the recent sharp falls in global oil prices, the relatively small narrowing of India’s trade deficit in October is disappointing. A renewed slump in exports is to blame. Looking ahead, lacklustre global growth and continued domestic bottlenecks …
17th November 2014
The sharp drop in WPI inflation in October adds to evidence of fading price pressures. It also supports our long-held view that the RBI could begin to cut interest rates earlier than many seem to expect. … Wholesale Prices …
14th November 2014
The recent sharp falls in gold and oil prices could feasibly push India’s current account into surplus over the coming months. Given that India’s large external deficit made its markets among the hardest hit during last year’s “taper tantrum”, this …
13th November 2014
Today’s inflation and industrial output data were both encouraging, but policymakers will focus mainly on evidence of fading price pressures. Given this, an early start to the RBI’s policy loosening cycle still looks on the cards. … Consumer Prices (Oct.) …
12th November 2014
The recent sharp falls in local food and global oil prices are likely to have kept both consumer and wholesale price inflation subdued in October. This would strengthen our view that the RBI is likely to cut interest rates earlier than most seem to …
10th November 2014
Two recent state election victories have strengthened the position of India’s ruling party, the BJP. More importantly, with the electoral calendar now looking less busy, there is a window of opportunity over the next 12 months for the government to push …
7th November 2014
Over the medium term India’s economy could, with the right policies, sustain GDP growth of 10%.The BJP’s strong mandate following its election victory in May has raised hopes that wide-ranging structural reform will now be implemented to achieve this. In …
5th November 2014
Indian consumer price inflation fell to its slowest pace on record in September. With the latest data also pointing to continued weakness in the industrial sector, we remain of the view that interest rates are likely to be cut a lot earlier than most seem …
20th October 2014
13th October 2014
The Reserve Bank of India (RBI) left its policy rates on hold today but, given the weakness of recent activity data and the fact that inflation has fallen below the central bank’s near-term target, we think that modest policy loosening will come onto the …
30th September 2014
Today’s Q2 GDP data for India, which show that the economy grew at its fastest pace since Q1 2012, come as welcome news. But we suspect that this might be as good as it gets for some time. Both fiscal and monetary policy look set to remain tight, while …
29th August 2014
The new government’s emphatic election victory in May has lifted some of the gloom that has hung over India’s economy in recent years. We see a number of ways in which the country’s new leaders can make a difference. While there is only limited scope for …
23rd July 2014
