SBI economists on Tuesday sharply slashed their FY22 GDP growth estimates to 7.9 per cent - the lowest among all analysts - from the earlier projection of 10.4 per cent growth. The economists at the state-run lender seemed to attribute the impact of the second wave of COVID-19 infections as a key factor for the revision in the growth estimate, and pitched for faster vaccination. "... our analysis shows a disproportionately larger impact on the economy this time and given that rural is not as resilient as urban, the pick-up in pent-up demand is unlikely to make a large difference in FY22 GDP estimates, and hence it could only be a modest pick-up," they said.
India's Gross Domestic Product (GDP) is expected to expand by 9.2 per cent in the current financial year, according to the Economic Survey 2021-22 tabled in the parliament on Monday. "Advance estimates suggest that the Indian economy is expected to witness real GDP expansion of 9.2 per cent in 2021-22 after contracting in 2020-21. "This implies that overall economic activity has recovered past the pre-pandemic levels," Economic Survey noted. Almost all indicators show that the economic impact of the "second wave" in Q1 was much smaller than that experienced during the full lockdown phase in 2020-21 even though the health impact was more severe, it said.
Global forecasting firm Oxford Economics on Monday revised downwards its India GDP growth forecast for 2021 to 10.2 per cent from 11.8 per cent previously, citing the country's escalating health burden, faltering vaccination rate and lack of a convincing government strategy to contain the pandemic. Oxford Economics also said that notwithstanding the likelihood of further mobility restrictions, it expects India's targeted lockdown approach, less stringent restrictions, and resilient consumer and business behaviour to mitigate the economic impact of the second wave.
India's likely medium-term potential growth will almost certainly be markedly lower than that experienced in pre-pandemic years, warns Shankar Acharya, former chief economic advisor to the Government of India.
India is likely to grow by 7.5 per cent in the first quarter of the current financial year, driven by rising aggregate demand and non-food spending in the rural economy, according to an article in the RBI's May Bulletin released on Tuesday. The Indian economy has demonstrated marked resilience in the face of geopolitical headwinds impacting the supply chain, said an article on the state of the economy published in the May Bulletin.
S&P Global Ratings on Wednesday upgraded India's sovereign rating outlook to positive from stable while retaining the rating at 'BBB-' on robust growth and improved quality of government expenditure. S&P said it could upgrade India's sovereign rating in the next 2 years if the country adopts a cautious fiscal and monetary policy that diminishes the government's elevated debt and interest burden while bolstering economic resilience.
The bulk of the incremental profits will come from oil & gas and automobile sectors.
Mortgage finance remains a structural growth opportunity in India with a policy focus on affordable housing, housing shortages, low mortgage penetration, and rising incomes as drivers. Affordable Housing Finance Companies (AHFCs) serve the mass market, low-income segments, which is the least-serviced category, and to operate in this segment, the mortgage provider needs good assessment skills. AHFCs and HFCs have also been increasing exposure in other mortgage segments (loan against property, developer loans among others).
Geopolitical events, macroeconomic data and quarterly earnings of corporates would guide the stock market in a holiday-shortened week ahead, analysts said. Stock markets will remain closed on Wednesday for Ram Navami. "This week promises to be crucial for the market as fresh worries about a potential conflict between Iran and Israel emerge.
Citing faster-than-expected recovery, rising consumer confidence and the resultant spending spike, Swiss brokerage UBS Securities has revised upwards its growth forecast for the current fiscal to 9.5 per cent from 8.9 per cent in September. The brokerage also sees the economy clipping at 7.7 per cent in FY23 but moderating to 6 per cent in FY24, as it expects the benefit of the low-interest rate regime to end by the end of FY23, and it sees the central bank hiking policy rates by 50 bps in the second half of the next fiscal. The Reserve Bank also forecasts 9.5 per cent GDP growth this fiscal while the average projection ranges from 8.5 to 10 per cent.
Billionaire Gautam Adani to two Union Ministers and Maharashtra Deputy Chief Minister Devendra Fadnavis among others on Sunday hailed India crossing $4 trillion mark though there was no official confirmation if the country has achieved the landmark. The finance ministry and the National Statistical Office did not immediately comment on the viral social media post on India's GDP crossing $4 trillion. Highly placed sources said that the viral news was incorrect and India was still shy of that landmark.
Structural reforms, pro-people programmes and employment opportunities helped the economy get new vigour, the finance minister said. After contracting by 5.8 per cent in 2020-21, the economy recorded a growth of 9.1 per cent in 2021-22.
There are reports that the government will soon cut income taxes by about Rs 50,000 crore to boost consumption.
Prime Minister Modi, I suggest that, instead, you distribute about one lakh crore rupees per year to the 80 crore poor, which will boost both consumption and economic growth, suggests Kalyan Singhal, McCurdy Professor of Business at the University of Baltimore.
India can sustain 8 per cent annual GDP growth and the conducive macroeconomic configuration may become a launching pad for a step-up in the country's growth trajectory, said an article on the 'State of Economy' in the central bank's March Bulletin published on Tuesday. Over the period 2021-24, gross domestic product (GDP) growth has averaged above 8 per cent. The global economy is losing steam, with growth slowing in some of the most resilient economies and high frequency indicators, pointing to further levelling in the period ahead, said the article authored by a team led by RBI Deputy Governor Michael Debabrata Patra.
India spends significantly less on defence than could be expected from a country that faces simultaneous armed threats from two hostile neighbours -- China and Pakistan.
Dominic Xavier wonders whether the steep decline in GDP numbers should be considered as an act of God too.
The GDP growth is estimated to come at the "deceptively high" level of 20 per cent for the April-June 2021 quarter but is far below the same in the pre-COVID times, rating agency Icra said on Wednesday. Icra said the low base of the last year, when the GDP had contracted by close to 24 per cent, "conceals" the impact of the second wave of COVID-19 infections. Economic activity is boosted by robust government capital expenditure, merchandise exports and demand from the farm sector, it said, estimating the GDP to grow by 20 per cent and the gross value added (GVA) will register a growth of 17 per cent for the June quarter.
Nirmala Sitharaman on Wednesday assumed charge as the Finance and Corporate Affairs Minister for the second consecutive term and is slated to soon present the final Budget for FY '25 that is going to set the tone for the Modi 3.0 government's priorities and direction for Viksit Bharat. Upon her reaching the North Block office, Sitharaman was greeted by Finance Secretary T V Somanathan and other top officials. Minister of State for Finance Pankaj Chaudhary was also present. Chaudhary assumed charge on Tuesday evening.
Despite the wobble in the markets over the past few weeks, Indian equities remain expensive as measured by several yardsticks. India's market capitalisation-to-GDP ratio, for instance, has touched a multi-year high. The ratio is currently at 116 per cent, based on the FY22E gross domestic product (GDP) number, above its long-term average of 79 per cent.
Despite the rally in equities over the last few years, India, according to Christopher Wood, global head of equity strategy at Jefferies, is still in early stages of an equity cult. Any changes to the capital gains tax for equities - both long-term and short-term - in Budget 2024 scheduled to be announced on July 23, he believes, can trigger a bigger correction that what the markets witnessed post the Lok Sabha election outcome on June 4 that saw the Bharatiya Janata Party (BJP) lose majority, though it was able to form the government with the help of coalition partners.
India, the world's fifth largest economy in the world, is likely to overtake Japan to become the world's third-largest economy with a GDP of $7.3 trillion by 2030, S&P Global Market Intelligence said in its latest issue of PMI. After two years of rapid economic growth in 2021 and 2022, the Indian economy has continued to show sustained strong growth during the 2023 calendar year. India's gross domestic product (GDP) is expected to grow 6.2-6.3 per cent in the fiscal year ending in March 2024, being the fastest-growing major economy this fiscal year.
The Indian economy needs to generate an average of nearly 78.5 lakh jobs annually until 2030 in the non-farm sector to cater to the rising workforce, according to the Economic Survey for 2023-24. The Survey tabled in Parliament on Monday also laid emphasis on the private sector's role to create employment in the country saying "In more than one respect, the action lies with the private sector. "In terms of financial performance, the corporate sector has never had it so good."
'The structural story of India is a multi-decadal story.' 'One should stay invested in that story and avoid reacting to what is happening globally.'
'The real repo rate is very high in terms of core inflation.'
Reserve Bank of India (RBI) is unlikely to cut the benchmark interest rate at its upcoming monetary policy review meeting, taking place soon after the announcement of the Lok Sabha election results, amid inflation challenges, said experts. The Monetary Policy Committee (MPC) may also refrain from rate cut as economic growth is picking up, notwithstanding the elevated interest rate of 6.5 per cent (repo) prevailing since February 2023. The meeting of the Reserve Bank Governor Shaktikanta Das headed MPC is scheduled for June 5 to 7.
Chief executive officers (CEOs) across sectors have expressed intentions to expand capacities, expecting the government's target to invest a record Rs 11.11 trillion on infrastructure development will act as a catalyst for a jump in consumer demand. "With the government planning a capex of Rs 11.11 trillion, private sector investment will come in a big way. Companies will be preparing for it right from today," H M Bangur, chairman of Shree Cement, told Business Standard. For the past few years, the investment scene in India has been dominated by government capital expenditures; private investments in the manufacturing sector have remained muted.
State Bank of India chairman Dinesh Kumar Khara has pitched for tax relief on interest income, saying it would help banks to garner savings that could be used for funding long-term infra projects. Currently, banks are required to deduct tax when interest income from deposits held in all the bank branches put together is more than Rs 40,000 in a year. With regard to savings accounts, interest earned up to Rs 10,000 is exempt from tax.
Now that the economy is growing at a higher-than-expected rate, it is time to accelerate the pace of fiscal consolidation, and the Budget could be a good starting point, argues Rajesh Kumar.
Indian GDP will grow at 8.5 per cent in 2021-22, and the rate will accelerate further to 9.8 per cent in 2022-23, a foreign brokerage said on Tuesday. The GDP had contracted by 7.3 per cent in the pandemic-hit FY21, and is widely expected to grow at a faster pace due to the base effect in 2021-22. The Reserve Bank of India (RBI) expects a 9.5 per cent growth in 2021-22, and the same to slow down to 7.8 per cent as things normalise.
Fitch Ratings on Tuesday raised India's growth forecast for the current fiscal to 7.2 per cent, from 7 per cent projected in March, saying elevated consumer confidence will drive spending, besides increased investments. In June update to its global economic outlook report, Fitch said it expects inflation to decline to 4.5 per cent by end of this year and RBI to cut policy interest rates by 25 basis points to 6.25 per cent.
Fitch Ratings has revised India's GDP growth estimate to 12.8 per cent for the fiscal year beginning April 1 from its previous estimate of 11 per cent, saying its recovery from the depths of the lockdown-induced recession has been swifter than expected. In its latest Global Economic Outlook (GEO), Fitch said revision is on the back of "a stronger carryover effect, a looser fiscal stance and better virus containment." "India's second half of 2020 rebound also took GDP back above its pre-pandemic level and we have revised up our 2021-2022 forecast to 12.8 per cent from 11.0 per cent," it said. "Nevertheless, we expect the level of Indian GDP to remain well below our pre-pandemic forecast trajectory."
Gold prices tumbled by Rs 3,350 to Rs 72,300 per 10 grams in the local market in New Delhi on Tuesday amid subdued demand by jewellers after the government announced the customs duty cut on the yellow metal and silver to 6 per cent.
'The first job you pick up may not be your ultimate dream job.' 'When the situation is no job or any job, my advice to them will be, pick up any job at the moment.' 'You should use that job as a learning experience.' 'It is easier to find a job when you are working somewhere than when you are sitting at home with no work.'
The finance minister's assertion that industry should not expect any spectacular announcements in the 2024 interim Budget suggest that the electoral imperatives of more tax concessions or higher expenditure on welfarist programmes could be far less pronounced than they were before the 2019 interim Budget, expects A K Bhattacharya.
The Reserve Bank on Wednesday retained the GDP growth forecast at 9.5 per cent for the current fiscal but cautioned that the economic recovery is not yet strong enough to be self-sustaining and durable.
Long-term macro trends indicate growth in demand for air travel. Trends from the ticketing website MakeMyTrip indicate a likely annual growth of between 11-17 per cent in Indian air travel demand over FY24-30. Through that period, InterGlobe Aviation or IndiGo may continue to make gains in market share in both domestic and international travel, aided by large fleet additions. IndiGo is the largest global customer of Airbus by far with 950 aircraft orders outstanding.
Singapore government's sovereign wealth fund Temasek is looking to invest $10 billion in India during the next three years, Ravi Lambah, Temasek's head of India and strategic initiatives, said.
Equity markets may witness a gradual up-move this week with some volatility as both election and earnings season are nearing their end, analysts said, adding that global trends and trading activity of foreign investors would hold significance in dictating investors' sentiment. Benchmark indices, which had a record-breaking rally last week, would also track global oil benchmark Brent crude and the rupee-dollar trend. The monthly derivatives expiry on Thursday may also fuel volatility in markets.
Moody's Investors Service on Wednesday said the outlook for global banks for 2024 is negative as central banks' tighter monetary policies have resulted in lower GDP growth. It said Indian banks' profitability will increase further on lower provisioning expenses and robust growth in higher-yielding retail segments. "Our outlook for global banks for 2024 is negative as central banks' tighter monetary policies have resulted in lower GDP growth.
Finance Minister Nirmala Sitharaman on Thursday announced a Rs 11.11 lakh crore spending on infrastructure and vowed to continue reforms as she resisted resorting to populist measures in Modi government's last Budget before general elections, instead choosing to stay on the path of cutting deficit while bolstering measures for focus groups.
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