Moody's Investors Service on Thursday slashed India's economic growth projection for 2022 to 7.7 per cent, saying that rising interest rates, uneven monsoon, and slowing global growth will dampen economic momentum on a sequential basis.
The BJP-led National Democratic Alliance's (NDA) slim majority in Lok Sabha may delay more far-reaching economic and fiscal reforms that could impede progress on fiscal consolidation, Moody's Ratings said on Wednesday. NDA securing a majority in the general elections will give a historic third term for Narendra Modi as Prime Minister of India. "We expect policy continuity, especially with regards to budgetary emphasis on infrastructure spending and boosting domestic manufacturing, to support robust economic growth.
India's GDP is estimated to grow at 7.4 per cent in the financial year 2022-23 with rising prices triggered by the Russia-Ukraine conflict posing as the biggest challenge to the global economic recovery, Ficci's Economic Outlook Survey released on Sunday said. According to the survey, the Reserve Bank of India (RBI) is likely to start a rate hike cycle in the second half of 2022, while a repo rate hike of 50-75 bps is expected by the end of the current fiscal. The RBI is expected to continue supporting the ongoing economic recovery by keeping the repo rate unchanged in its April policy review, the survey said.
'It does not understand economics. The entire focus of this government is skewed.'
Chief Economic Advisor V Anantha Nageswaran on Thursday said the economy is expected to grow at 6.5 per cent in the current fiscal notwithstanding deficient rains in August. India recorded economic growth of 7.8 per cent in the April-June quarter of 2023-24 against 13.1 per cent in the year-ago period. India's economy in Q1 grew at the fastest pace in a year, on the shoulders of a boost in capital expenditure both at central and state levels, along with stronger consumption demand, especially in rural areas, and improved performance in the services sector, he said.
Donald Trump's exaggerated opinion of his dealmaking capacity can get him into trouble, observes R Sriram.
The Reserve Bank on Friday retained GDP growth forecast of 7 per cent for 2024-25 financial year, lower than the 7.6 per cent expansion estimated for FY24. In its February monetary policy, the RBI had projected the GDP growth rate of 7 per cent for the financial year beginning April 1. Announcing the current fiscal's first bi-monthly monetary policy, RBI Governor Shaktikanta Das said the rural demand is gathering pace, and sustained growth in manufacturing sector should boost private investment.
The country's gross domestic product (GDP) is likely to grow more than 9.5 per cent in fiscal 2021-22, an SBI research report-Ecowrap said. The economy grew at 8.4 per cent in the second quarter of the current fiscal, according to data released by the National Statistical Office (NSO) on Tuesday. The growth in the April-June quarter of this fiscal stood at 20.1 per cent. In October's monetary policy review, the Reserve Bank of India had retained its projection for real GDP growth at 9.5 per cent in 2021-22, consisting of 7.9 per cent in Q2; 6.8 per cent in Q3; and 6.1 per cent in Q4 of 2021-22.
The Reserve Bank is unlikely to cut the benchmark interest rate in its forthcoming bi-monthly monetary policy review later in the week as retail inflation is still a cause of concern, and there is a possibility of the Middle East crisis deteriorating further, impacting crude oil and commodity prices, say experts.
'As we enter 2025, it must be acknowledged that there is a convergence of capital, influential people (from business and politics) and technology deciding the destiny of others in the name of pride, patriotism, nationalism, nation building, all of it thinly veiled disguises for personal profit and glory,' asserts Shyam G Menon.
India's services sector activity fell to a 10-month low in September as new businesses, international sales and output growth moderated, a monthly survey said on Friday. The seasonally adjusted HSBC India Services Business Activity Index fell from 60.9 in August to 57.7 in September, indicating that though the output registered an increase, the pace of growth was the slowest since November 2023. In the Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
India's economy grew by 1.6 per cent in the fourth quarter of 2020-21, restricting the full-year contraction to 7.3 per cent, official data showed on Monday. The fourth quarter growth was better than the 0.5 per cent expansion in the previous October-December quarter of 2020-21. The gross domestic product (GDP) had expanded by 3 per cent in the corresponding January-March period of 2019-20, according to data released by the National Statistical Office (NSO).
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.
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.
The Indian economy is likely to post better than anticipated growth in the second quarter (July-September) owing to robust urban consumption and expansion in services, a Business Standard analysis of high-frequency indicators showed. While gross domestic product growth in the September quarter is expected to come below the 7.8 per cent print in the June quarter due to a favourable base fading, analysts say the print will be much closer to 7 per cent than the 6.5 per cent anticipated earlier. While the Reserve Bank of India (RBI) had estimated 6.5 per cent growth for July-September, last month Governor Shaktikanta Das said the growth figure would surprise on the upside.
The ties between India and the Maldives came under severe strain since Muizzu, known for his pro-China leanings, took charge of the top office in November.
The Reserve Bank of India's (RBI's) interest rate decision, West Asia conflict and trading activity of foreign investors are the key factors that will dictate investors' sentiment in the market this week, analysts said. Moreover, quarterly earnings from IT bellwether TCS, domestic macroeconomic data and movement in global oil benchmark Brent crude would also guide trends in the market. Worsening tensions in the Middle East and foreign fund outflows were the major culprits behind the equity markets sharp fall last week.
The bulk of the incremental profits will come from oil & gas and automobile sectors.
Equity investors will track the trading activity of foreign investors, global trends and ongoing earnings results for further cues, and benchmark indices may continue to witness consolidation in a holiday-shortened week amid the monthly derivatives expiry, analysts said. Markets fell sharply last week amid massive foreign capital outflows and dismal Q2 earnings so far. Weakness in the markets might continue in the near term amid cautiousness among investors ahead of the US presidential election early next month, an expert said.
The 16th Brics Summit beginning Tuesday in Kazan, Russia, is expected to see more focus on creating a sharper energy policy for Brics that ensures closer partnership among members in both energy security and energy transition, official sources said. The same is expected to be a part of the Kazan declaration, currently being negotiated, they added.
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.
Global brokerage firm CLSA has reversed its early tactical shift from Indian equities to Chinese stocks, and has decided to raise India allocation while cutting exposure to China. In its report titled 'Pouncing Tiger, Prevaricating Dragon', CLSA cited challenges facing Chinese markets in the aftermath of Donald Trump's victory in the US elections as the reason for the move. "Misfortune can happen in threes. So it has played out for Chinese equities over the past week.
The RBI is fully aware that the high-cost loans and high indebtedness of the borrowers could pose financial stability risks, if not addressed by these NBFCs. Governor Shaktikanta Das has issued a stern warning, saying the RBI is closely monitoring these areas and will not hesitate to take appropriate action, if necessary, if the culprits don't opt for self-correction. Watch out for some action, soon, notes Tamal Bandyopadhyay.
Dominic Xavier wonders whether the steep decline in GDP numbers should be considered as an act of God too.
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.
United States President-elect Donald Trump on Tuesday said that he understands the Russian feeling with NATO (North Atlantic Treaty Organisation) being on their doorstep.
The challenge for the RBI in 2024 is likely to be less about containing elevated inflation and more about curbing excessive financial market exuberance and a 'problem of plenty', notes Sajjid Chinoy, Chief India Economist JP Morgan.
'Maharashtra is virtually in a debt trap.'
Union Finance Minister Nirmala Sitharaman on Tuesday said the fiscal deficit for 2024-25 is estimated at 4.9 per cent of GDP.
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.
Road Transport and Highways Minister Nitin Gadkari on Tuesday favoured giving a majority 51 per cent stake to foreign partners in joint ventures for building tunnels and detailed project reports to improve work quality. Gadkari said providing a majority stake to a foreign partner in the joint venture is necessary to ensure that only serious and technically qualified players bid for tunnel projects.
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.
'Any finality in such matters requires political views. We will review it closer to the full Budget.'
'It's the second-largest market for us after the US, and should be the largest market at some point.'
Quarterly earnings of corporates, trading activity of foreign investors and inflation data are the key factors that are expected to drive the momentum in the equity markets this week, analysts said.
Foreign portfolio investors (FPIs) have net sold domestic shares worth over $10 billion so far this month amid a shift to China, which not only offers attractive valuations compared to India but has also announced several measures to support the economy and the stock market in recent weeks. If the trend doesn't reverse, this will be the first time that overseas funds will yank out more than $10 billion from Indian equity markets in a month.
'A long-term investor with a 4 to 5 year horizon could invest in this theme via SIPs.'
Stock markets will be driven by domestic inflation data, ongoing quarterly earnings from corporates and global trends this week, analysts said. News flows around the general election would also be tracked by investors, market experts said.
Trading in the equity market will largely depend on two major events this week - general elections result and the RBI interest rate decision - analysts said, adding that the benchmark indices may rally on Monday on exit polls' prediction of a massive win for the BJP-led NDA and strong GDP data. Exit polls on Saturday predicted that Prime Minister Narendra Modi will retain power for a third straight term, with the NDA expected to win a big majority in the polls. Counting of votes will take place on June 4.
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."
