Hardening prices of manufactured items during the month may refrain the Reserve Bank of India from cutting rates in its policy review on February 8.
Almost all infrastructure ministries continued spending on capex throughout the lockdown, even as the Centre tried to maintain some semblance of economic normalcy.
Outlay for infra is also expected to see a significant increase in view of the government's Rs 111-trillion investment plan under the national infrastructure pipeline to develop social and economic infrastructure over five years.
India's appetite for imported crude oil may wane in fiscal year (FY) 2023 from record levels in pre-pandemic 2019-20 fiscal as higher oil prices, a spillover from the conflict in Ukraine, and increasing use of biofuels affect domestic demand for petroleum products. Brent crude surged to a nine-year high, shy of a July 2008 record $147.50 a barrel, before declining to around $100 a barrel - but the volatility in commodity rates will slow global economic growth and use of fuels. Demand for all oil products may grow at only 2-3 per cent in FY23, slower than the current fiscal and nearly half the 5.5 per cent growth estimated by the petroleum ministry, according to industry officials.
The deficit for the first five months of the year stood at 96 per cent of the full-year target of Rs 5.46 lakh crore despite cut in capital expenditure in August.
Mop up grows 10% y-o-y at Rs 1.05 trillion, almost equal to levels in February before a nationwide lockdown to contain the coronavirus pandemic
After the government sought Parliament's nod for a second batch of supplementary demand for grants that will cause a hit of Rs 2.99 trillion to the exchequer, doubts suddenly arose about the government's ability to meet the Budget projections of reining in its fiscal deficit at 6.8 per cent of gross domestic product (GDP), or Rs 15.06 trillion, for the current financial year. Till now, many were of the opinion that the government would succeed in checking the deficit at a much lower figure than what was given in the Budget Estimates (BE). The government had sought Parliament's approval to spend Rs 3.74 trillion extra, but Rs 74,517.01 crore will be matched by equal savings on other heads.
Deflation masked the rise in food inflation to a 5-month high.
Economic affairs secretary S C Garg said that all macroeconomic parameters are performing well.
The retail inflation rate breached the 6 per cent upper tolerance limit of the RBI for the first time in seven months in January, while the wholesale price index stayed in double-digits for the 10th month in a row, showed two sets of data released by the government on Monday. Retail inflation, the key input for the RBI while reviewing the repo rate every two months, soared during the month mainly because of a spike in certain food items. The previous high for retail inflation was 6.26 per cent in June 2021.
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.
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.
Experts said the slowdown could be attributed to adjustments leading to destocking and the offering of discounts by companies as the government ushered in the new indirect taxation system on July 1.
Import segments which recorded negative growth include gold, silver, transport equipment, coal, fertiliser, machinery and machine tools. However, exports of oil seeds, coffee, rice, tobacco, spices, pharma, and chemicals reported positive growth in June.
Index of industrial production data had also shown that the sector grew at 3.1 per cent after contracting in the previous quarters.
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.
India's economic growth accelerates to 7.4% in Sept quarter
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.
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.
Central bank moves to infuse liquidity into bond market to help boost sentiment.
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.
Growth was primarily pushed by a jump in steel and electricity generation, apart from a sustained rise in natural gas output.
'The real lifting of the economy will happen only if this momentum sustains in the coming months.'
Retail inflation remained above the RBI's comfort level for the second consecutive month despite slipping slightly to 6.26 per cent in June while the factory output recorded a growth of 29.3 per cent in May, mainly on account of the base effect, the government data showed. The marginal slippage in the Consumer Price Index (CPI)-based inflation was noticed despite little firmness witnessed in the food inflation which inched up to 5.15 per cent in June from 5.01 per cent a month ago. Retail inflation based on Consumer Price Index (CPI) was 6.3 per cent in May 2021 and 6.23 per cent in June 2020.
India showed revival signs in the March quarter.
WPI inflation, which was in the negative zone from November 2014 to March 2016, has been on an upward trend for the seventh straight month
A collapse in global oil prices has unleashed a wave of monetary easing.
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.
The revision will do little to help the Congress party-led ruling alliance, which faces an uphill battle in elections due by May amid allegations of economic mismanagement, corruption scams and high inflation.
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.
Much of the Q3 data will simply not be available for the CSO to factor in its calculation.
Experts say a large part of the expenditure in April was spent on heads such as creating infrastructure for testing capacity and procuring testing kits, among other things.
Experts warn of over-interpreting the numbers and said their sustainability needed to be watched beyond November, says Indivjal Dhasmana.
Barring rice, spices, iron ore and pharmaceuticals, all the remaining 26 key sectors registered negative growth in May. Imports too plunged 51 per cent to $22.2 billion in May.
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.
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.
RBI may hold rates steady as economic parametes are going strong, say experts.
Spiralling prices pinched the pocket of consumer as edible oil, fuel and many other commodities turned dearer this year amid pandemic-induced disruptions but the inflationary pressure is anticipated to ease, though marginally, in the coming months. As consumers, at retail as well as wholesale levels, are willy-nilly learning to live with the new normal of curbs to contain the spread of coronavirus infections, experts are of the view that elevated inflation is likely to stay longer. After dealing with the devastating blows from the second COVID wave, especially during the April-June period, the economy is well on the revival path but the emergence of Omicron might unsettle the recovery trajectory in the short term.
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
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