Govt squeezed capital expenditure, and also cut revenue expenditure, that does not go into creating assets, by 11% in H1
Inflation in onion continued to rule high at 42.22 per cent and in potato at 43.25 per cent.
Declining vegetable prices brought down the retail inflation to a 15-month low of 4.59 per cent in December and within the comfort zone of the Reserve Bank, government data showed on Tuesday. It is for the first time during the current fiscal that the Consumer Price Index (CPI) based inflation print is below 6 per cent or in the RBI's target range of 2 to 6 per cent. The central bank factors in the CPI-based inflation while arriving at its monetary policy. The inflation in December 2020 came down from 6.93 per cent in November, mainly on account of 10.41 per cent decline in vegetable prices over the year-ago period.
Among food articles, vegetable prices surged by 69.69 per cent mainly on account of onion, which witnessed 455.83 per cent jump in prices, followed by potato at 44.97 per cent.
Beside manufacturing, deceleration was also witnessed in sectors like agriculture, construction and electricity, gas and water supply.
The states that witnessed high CPI-based inflation rates were Lakshadweep, Tripura, Odisha, Uttar Pradesh, Kerala, Madhya Pradesh, Puducherry, Tamil Nadu, Rajasthan, Manipur and Mizoram.
Currently, the retail inflation is well below the RBI's comfort level. The government has asked the central bank to keep inflation in the range of 4 per cent.
"Growth is expected to moderate gradually in China... pick up in India, and remain broadly stable in the Asean-5 region."
Industrial output had slowed to 5-month low of 2.1% in March.
Economists, however, caution against interpreting the data as a broad-based revival
Exports in February fell to $21.55 billion compared with $25.35 billion a year ago
Welcoming the latest round of stimulus announced by Finance Minister Nirmala Sitharaman on Thursday, experts said the measures will support the economic recovery boosting demand, job creation and by providing funds to the MSME and stressed sectors. The fiscal impact of the stimulus is likely to be around 0.25-0.6 per cent of GDP in the current fiscal, they said.
After contracting for two quarters in a row, the Indian economy entered the positive territory with a growth of 0.4 per cent in the October-December quarter, mainly due to good performance by farm, services and construction sectors, official data showed on Friday. Trade and hotel industry registered a contraction of 7.7 per cent during the third quarter this fiscal, as the sectors continued to suffer on account of coronavirus pandemic. According to the data released by the National Statistical Office (NSO), the farm sector recorded a growth of 3.9 per cent, and the manufacturing sector output grew by 1.6 per cent in the quarter under review.
Economic affairs secretary S C Garg said that all macroeconomic parameters are performing well.
The retail inflation, which is factored in by the RBI to arrive at its monetary policy, has been on decline since last month. The previous low was 5.54 per cent in November 2019. The government has asked the RBI to restrict the inflation around 4 per cent, with a margin of 2 per cent on the either side.
During the first quarter ended June, gross tax collections fell 31 per cent driven down by a massive 76 per cent plunge in advance tax mop-up, as the country was in a full lockdown due to the pandemic.
Direct tax collections grew by a meagre 6.6 per cent during April-July of the current financial year against the Budget target of 14.4 per cent for 2018-19. Corporation taxes, in particular, grew at just 0.57 per cent, the lowest in the first four months in at least seven years.
If the government cuts wasteful expenditure as it is trying now, the deficit would at most fall to 8 per cent, not less than that.
RBI targets to keep inflation at 4 per cent, (+/- 2 per cent), and its rise beyond this comfort zone will put pressure on the central bank to hike rates.
The GDP has been estimated at Rs 126.54 lakh-crore (Rs 126.54 trillion).
Inflation in 'fuel and power' basket rose sharply to 11.22 per cent in May from 7.85 per cent in April as prices of domestic fuel increased in line with rising global crude oil rates.
For the first eight months of the current financial year, the figure stood at Rs 7.17 trillion.
Among the states due for election next year are AP, Haryana and Odisha, which have a fair share of agri credit. If these states individually announced debt relief, the combined waiver would be at least around Rs 600 bn to Rs 700 bn. Clearly, this will be a frightening challenge for Indian banks.
If imputed inflation for April and May is used, then you have inflation of over 6 per cent for two consecutive quarters, which is a worrying signal for the RBI.
The fiscal deficit rose primarily on the back of lower non-tax revenues, which came in at 60 per cent of full-year target, compared with 62.4 per cent for the same period last year.
The RBI has targeted consumer price inflation at 6 per cent by January and 4 per cent by March 2018.
Build up inflation rate in the financial year so far was 2 per cent compared to a build up rate of 4.56 per cent in the corresponding period of the previous year. Inflation in food articles as a group rose to 11.08 per cent during the month as against 9.80 per cent in the previous month, mainly driven by exorbitantly high onion prices, the rates of which spiked by over 172 per cent from a year-ago. The annual rate of inflation, based on monthly wholesale price index was at 0.16 per cent in October.
During the month, inflation in vegetables shot up to 35.99 per cent, as against 26.10 per cent in October. Likewise, the prices of cereals and eggs grew at a faster pace of 3.71 per cent.
September import growth was the second lowest this fiscal year, after the April growth figures of 4.6 per cent, bringing the trade deficit down to $13.98 billion
Growth was primarily pushed by a jump in steel and electricity generation, apart from a sustained rise in natural gas output.
India plans to keep its fiscal deficit within 3.9% of GDP.
If the industrial sector expanded, growth rate is likely to rise in the remaining quarters to reach 7.6-7.8 per cent for 2017-18.
India Ratings principal economist Sunil Kumar Sinha said the Brexit is a mixed bag for the country.
While the farmers are not getting remunerative prices for their produce, at the same time they are forced to pay high prices for items they consume.
India's economic growth accelerates to 7.4% in Sept quarter
The immediate revenue loss could worsen the Centre's fiscal deficit, from the budgeted 3.3 per cent of gross domestic product (GDP) to 3.7 per cent of GDP -- a massive 40-basis-point increase. It was stabilised at 3.4 per cent since 2016-17, report Abhishek Waghmare and Dilasha Seth.
The internals of the food inflation are worrying, given a broad-based uptick across categories that tend to be sticky, such as proteins, and a narrower-than-expected reduction in inflation for vegetables.
By no means do economists see the Reserve Bank of India stop at just a 25-bp cut. Some of the economists such as Soumyakanti Ghosh of State Bank of India are of the firm view that rates have room to fall by a total of 75 bps in the current financial year, starting with 25 bps in the August 7 policy.
Index of industrial production data had also shown that the sector grew at 3.1 per cent after contracting in the previous quarters.
Imports rise at highest pace in more than 2 years as crude oil price spikes.
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