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India has been the star performer among major EMs over the past several quarters and the latest data suggest that the strength of economic activity has continued through to the eve of the election. Headline inflation is grinding back to the RBI’s 4% …
24th April 2024
India retained its title as the world’s fastest-growing major economy last year and the latest data suggest that the economy continues to perform exceptionally well. Headline inflation has eased in recent months and we think it will reach the 4% midpoint …
26th March 2024
India’s economy performed exceptionally well last year and the latest data suggest that it has made a flying start to 2024 too. While inflation eased last month, we think it will be a slow grind back to the 4% midpoint of the RBI’s 2-6% target range. That …
22nd February 2024
This is a special Global Economics Chart Pack that provides clients with key analysis to make sense of the macro and market impact of the disruptions to maritime shipping. The charts in this document come from our brand-new shipping dashboard , which …
25th January 2024
India’s economy has grown at a healthy clip over recent quarters and, with the help of government spending, we think it will continue to hold up well ahead of the upcoming general election. Given also that headline consumer price inflation is likely to …
17th January 2024
India’s economy has grown at a healthy clip over recent quarters and, with the help of government spending, we think it will continue to hold up well ahead of next year’s general election. Given also that food inflation has picked up again, the RBI will …
13th December 2023
India’s economy continues to show resilience this year and annual GDP growth is likely to come in stronger than the 6.3% we had been forecasting. While inflation is well within the RBI’s tolerance range, the renewed surge in food prices in November is a …
23rd November 2023
India’s economy appears still to be holding up well in the second half of the year. And although inflation has dropped back sharply to within the RBI’s target range, the outlook is still clouded by uncertainties related to food prices. This is a key risk …
18th October 2023
India’s economy is showing signs of coming off the boil, and core inflation is moderating. However, a surge in food prices has pushed headline CPI inflation well beyond the upper limit of the RBI’s 2-6% tolerance range. The onset of a severe El Niño and …
20th September 2023
India’s economy is showing signs of coming off the boil, and core inflation is moderating. However, the surge in food prices has pushed headline CPI inflation well beyond the upper limit of the RBI’s 2-6% tolerance range. The onset of a severe El Niño and …
17th August 2023
India's economy is showing signs of coming off the boil and, with inflation lodged within the RBI’s target range, a resumption of the tightening cycle looks unlikely. However, the onset of a severe El Niño is a looming threat and presents a key risk to …
19th July 2023
This new Chart Pack has been designed to replace our Chart Book in response to client feedback to make our insights more accessible, and with more options to incorporate them into your workflow. Use the menu at the top of the viewer to navigate around the …
20th June 2023
The past month has brought some encouraging news on the inflation front. Consumer price inflation dropped sharply in April to an 18-month low, keeping the headline rate comfortably within the RBI’s 2-6% target range. Both energy and food price inflation …
22nd May 2023
India is benefitting from maintaining its historic unaligned stance in tensions between the US and Russia. Since the start of the war in Ukraine, India has been ramping up oil imports from Russia to take advantage of discounted prices. (See Chart 1.) And …
20th April 2023
Spill-overs from the turmoil in the global banking system to India have been limited so far, but the big unknown is whether difficulties will flare up at home. Bank problems can arise via multiple channels. There may be banks that have not adequately …
22nd March 2023
In a crowded field given the FY23/24 Union Budget and the RBI’s more-hawkish-than-expected policy announcement, the Adani short-selling crisis has been the main story over the past month. So far at least, there are few signs of broader contagion. Foreign …
21st February 2023
India has historically remained unaligned geopolitically but we made the case last year that, in a fracturing global economy , it was more likely to lean towards a US-led bloc and away from a China-led bloc. Events over the past month have strengthened …
18th January 2023
The government’s reform agenda struggled for momentum in 2022 as key state elections (notably in Uttar Pradesh in March and Gujarat in December) dominated the calendar, and surging food and fuel prices set a tricky political backdrop. But the results of …
20th December 2022
The RBI has hiked interest rates by 190bps since May and, while that is relatively benign compared to the moves seen in many other EMs, this tightening is now feeding through to the economy. Purchases of big ticket items such as passenger vehicles have …
21st November 2022
The RBI continued frontloading policy tightening in its late-September meeting with another 50bp hike to the repo rate (to 5.90%) but communications since then suggest that some MPC members are ready to ease off the brakes. The minutes to that meeting …
19th October 2022
The RBI this month asked four public-sector banks to trial its central bank digital currency (CBDC) before year-end, keeping to the timeline that it set out when plans were first announced in the FY22/23 Union Budget. As our CBDC handbook explains, any …
21st September 2022
GDP data for Q2 (Q1 of FY22/23) due next week should show that the economy grew at a robust pace last quarter despite the onset of monetary policy tightening. And more timely indicators suggest that the economy has held up well so far in Q3 too. The …
26th August 2022
The latest population projections released by the UN this month show that India will overtake China as the world’s most populous nation in 2023 (see Chart 1), a touch earlier than previously expected. The UN also projects that India’s working-age …
21st July 2022
The rupee has held up better than most EM currencies this month and the recent drop in FX reserves strongly indicates that this is in part because the RBI has once again ramped up its FX interventions. (See Chart 1.) RBI Governor Shaktikanta Das has made …
22nd June 2022
The RBI kicked off its tightening cycle this month with a 40bp hike to the repo rate (to 4.40%) in an unscheduled policy announcement. The minutes to that meeting show that several MPC members are keen to frontload policy tightening to keep a lid on …
27th May 2022
The key policy development this month was the introduction of a new Standing Deposit Facility (SDF), through which the RBI will drain excess banking sector liquidity. The SDF now provides the floor for the interest rate corridor, previously set by the …
28th April 2022
The surge in commodity prices as a result of the war in Ukraine will have several repercussions for India’s economy. As a major net commodity importer, its terms of trade will deteriorate and we think the current account deficit could reach almost 4% of …
17th March 2022
Net portfolio outflows from Indian financial markets have picked up over recent weeks as the growing prospects of war between Ukraine and Russia and tighter global monetary policy have caused risk appetite to sour. Outflows from the equity market have …
23rd February 2022
The rapid spread of the Omicron variant in India has caused economic activity to weaken so far in 2022. But the damage has been much less severe than during the previous two outbreaks. (See Chart 1.) Perhaps unsurprisingly, airport traffic has been one of …
27th January 2022
Upside inflation risks are building in India. Damage to crops from bad weather has caused spikes in vegetable prices recently. And base effects aren’t helpful: food inflation will accelerate in year-on-year terms over the next few months even if prices …
20th December 2021
The repeal this month of controversial reforms aimed at liberalising the agriculture sector is arguably the biggest political setback that the Modi government has faced since coming to power in 2014. And while the direct economic impact of abandoning …
24th November 2021
The latest activity data suggest that India's recovery has entered a slower phase, with global supply shortages starting to weigh on the economy too. In addition, India’s vaccination coverage remains low, leaving the economy exposed to the threat of …
20th October 2021
Speculation is building that India will be included in major global bond indices over the next year or so. If that happens, it would highlight the local bond market’s growing maturity and be cast as a coup by the government, for which bond index inclusion …
22nd September 2021
Foreign portfolio outflows from Indian financial markets have been easing this month (see Chart 1), bucking the broader EM trend. This may have been driven in part by the improvement in the virus situation. Looking ahead, the growing likelihood of the US …
25th August 2021
Amid the ongoing debate over inflation in a post-pandemic world, one thing that does appear clear is that near-term price pressures in India have peaked. Consumer price inflation held steady in June at 6.3% y/y, while wholesale price inflation dropped for …
21st July 2021
India’s 10-year government bond yields have remained stable at around 6% over the past month, taking the unexpectedly large jump in inflation in May and a more hawkish turn by the US Fed in their stride. That reinforces our long-held view that borrowing …
23rd June 2021
New virus cases in India remain extremely high, but some solace can be taken from the fact that they have dropped rapidly over the past couple of weeks back to their level in mid-April. The share of tests returning positive has fallen too. Encouragingly, …
20th May 2021
Our in-house mobility tracker suggests that the surge in virus infections in India is now weighing on activity. (See Chart 1.) This is likely to become more pronounced as the outbreak has become more widespread, causing several state assemblies to tighten …
21st April 2021
Foreign investor appetite for Indian assets has faded in recent weeks. Inflows into the equity market have waned, while foreigners have turned into net sellers of Indian debt. (See Chart 1.) This chimes with movements in portfolio flows in other major …
18th March 2021
Indian GDP data due to be released on Friday are likely to show only a small contraction in annual growth in Q4 2020, and high-frequency indicators point to a relatively strong start to 2021. Indeed, our in-house mobility tracker suggests that activity …
24th February 2021
The Reserve Bank of India (RBI) is set to tighten regulation of non-bank financial companies (NBFCs) over the coming weeks. Alongside stricter audits of many smaller lenders, the RBI is likely to require NBFCs to maintain larger buffers of liquid assets. …
21st January 2021
COVID-19 has ravaged India’s economy in 2020, and GDP is all but certain to have suffered its largest slump on record this year. But there are reasons for optimism as the year draws to a close. Several activity indicators point to a continued recovery in …
23rd December 2020
India’s government has not put in any pre-orders for the Pfizer and Moderna vaccines that were first to report encouraging Phase 3 trial results. But, alongside the US, India has the largest order of any country for the Oxford/AstraZeneca vaccine. (See …
24th November 2020
New COVID-19 cases in India have dropped significantly over the past month. (See Chart 1.) Encouragingly, the share of tests returning positive has also dropped, indicating that the improvement in test results reflects a genuine drop in infections. That …
21st October 2020
In contrast to many other economies, the 20% y/y slump in India’s services sector in Q2 was less pronounced than that in industry, which collapsed by almost 40% y/y. But we doubt that the “outperformance” of the services sector will last. Containment …
24th September 2020
If the monthly activity data are anything to go by, GDP data for Q2 (Q1 of FY20/21) due at the end of the month will show that investment slumped by more than 30% y/y. (See Chart 1.) That will prove the bottom given the lifting of lockdown measures since …
19th August 2020
After hitting an all-time low in April, the rupee has strengthened by 3% against the US dollar as risk appetite has returned to global financial markets. (See Chart 1.) But while we think risky assets generally – and most EM currencies – will continue to …
22nd July 2020
After tightening dramatically in March following the outbreak of the coronavirus, our proprietary index shows that financial conditions in India have eased substantially over the past couple of months. (See Chart 1.) This is in large part due to the RBI’s …
24th June 2020
Despite a stringent lockdown that has lasted nearly two months, new recorded cases of COVID-19 in India remain on a sharp upward trajectory and hit a record high yesterday. (See Chart 1.) The true number of cases is likely to be higher still given limited …
20th May 2020
Measures to contain the spread of the coronavirus will increase strains among traditional banks, but the shadow banking sector – still reeling from a large-scale default 18 months ago – is likely to fare even worse. Shadow banks have tended to lend to …
22nd April 2020
