Reflecting subdued global economic growth, India's outward foreign direct investment (FDI) fell by 33.3 per cent sequentially to $1.21 billion in August, compared to over $1.82 billion in July.
Whether it's Carrefour, Ford, or other foreign majors, they are ready to adjust their strategies and design their plans in a way that would address the Indian consumption story.
'India's top companies currently lack the organisational wherewithal to hire and train 2 million interns annually, given their current scale of operations and existing employee base.'
With concern on food inflation ebbing with the monsoon progressing well, the Reserve Bank of India (RBI) is warming up to the idea of a change in stance to "neutral" from "withdrawal of accommodation", according to economists. In his speech on Thursday during the annual event of the Federation of Indian Chambers of Commerce and Industry-Indian Banks' Association, RBI Governor Shaktikanta Das said: "The balance between inflation and growth is well-poised."
Credit outstanding to the housing sector rose by nearly Rs 10 lakh crore in the last two fiscals to reach a record Rs 27.23 lakh crore in March this year, according to RBI's data on 'Sectoral Deployment of Bank Credit'. Experts from banking and real estate sectors attributed this growth in housing credit outstanding to a strong revival in the residential property market post-COVID pandemic on pent-up demand. According to the data of the Reserve Bank of India (RBI) on sectoral deployment of bank credit for March 2024, the credit outstanding to the housing (including priority sector housing') stood at Rs 27,22,720 crore in March 2024, up from Rs 19,88,532 crore in March 2023, and Rs 17,26,697 crore in March 2022.
'The nominal GDP growth assumption for FY25 may be revised upwards on higher growth expectations.'
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.
The prospect of India Post turning into a bank sounds like a capital idea, especially since we are talking about inclusive banking.
It is generally felt that DCTs are a more efficient system than, say, physical subsidies. This does hold when conditions are ideal and back-end structures are in place.
While RBI is right to worry about the share of outstanding ECBs in our reserves, firms need these to finance investment -- some prudent limits need to be set, says Madan Sabnavis.
While UPA has been more pro-farmer, and delivered better GDP growth while the NDA was steadier on the fiscal and industrial side.
The Interim Budget for 2024-25 (FY25) to be presented on February 1 is likely to assume 10-10.5 per cent nominal gross domestic product (GDP) growth against 8.9 per cent estimated for FY24 by the National Statistical Office (NSO). "We were waiting for the First Advance Estimates GDP numbers for FY24. "We will finalise the nominal GDP growth assumption for FY25 Interim Budget in a couple of days.
Banks submitted bids amounting to Rs 4.75 trillion, around 2.5 times of the notified amount of Rs 1.75 trillion, at the Variable Rate Reverse Repo (VRR) auction conducted by the Reserve Bank of India (RBI) on December 22, a day after the liquidity deficit in the banking system widened to Rs 2.5 trillion. In the most recent VRR auction held by the RBI on December 15, bids totaling 2.7 times the notified amount were received. Banks secured Rs 1 trillion at a weighted average rate of 6.63 per cent.
Alloting more funds for MNREGA and PM-KISAN could wipe out the entire additional money that the Centre may have for FY25.
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.
Interrupting a two-month streak of decline, outward foreign direct investment (FDI) rose sequentially to $1.85 billion in July over $1.07 billion in June, an increase of 73 per cent. However, it was lower than the $2.18 billion in July last year, according to the Reserve Bank of India data. Outbound FDI, expressed as financial commitment, has three components - equity, loans, and guarantees.
The protesting farmers' main demand to legalise the minimum support price (MSP) regime has divided opinion. One school of thought says it would lead to crop diversification and help India keep under check its burgeoning import bill on edible oils and pulses, while another says it would incentivise farmers to produce low-quality crops. Contrary to popular perception, India has a trade surplus in agriculture and allied activities, which stood at $18.65 billion during 2022-23 (FY23) against $15.92 billion in the previous year. However, the surplus was mainly on account of rice, wheat, sugar, spices, and buffalo meat.
'The expeditious enactment of labour codes and strategic measures to bridge the skills jobs gap are critical.'
In mid-March this year, the finance ministry asked state-run banks to review their gold loan portfolio for the two-year period between January 1, 2022, and January 31, 2024. This business had grown at a fast clip. Reserve Bank of India (RBI) data has it that it grew 15 per cent to Rs 1 trillion in FY24. Now, in recent times, any kind of exuberance in financial services has seen the authorities swoop down - be it pushing the lines on governance or unsecured credit.
Growth rate in per capita income is projected to fall to the lowest in 21 years this financial year - except for the financial years 2019-20 (FY20) and 2020-21 (FY21) - according to the first advance estimates. During the last 21 years, the two periods - FY20 and FY21 - saw growth rates in per capita income lower than 7.9 per cent, seen during FY24. This was despite the real gross domestic product (GDP) being projected to grow by 7.3 per cent in the current financial year by the first advance estimates.
The country's foreign exchange reserves crossed the $600 billion mark for the first time after increasing by $6.842 billion in the week ended June 4, RBI data showed on Friday. The reserves surged to a record $605.008 billion in the reporting week, helped by a rise in foreign currency assets (FCA), a major component of the overall reserves, as per weekly data by the Reserve Bank of India (RBI). In the previous week ended May 28, 2021, the reserves had swelled by $5.271 billion to $598.165 billion.
India's industrial production contracted by 4 per cent in October, the sharpest fall in 26 months, mainly due to decline in output of manufacturing and subdued performance of mining and power generation sectors, according to official data released on Monday. The Index of Industrial Production (IIP) had grown 4.2 per cent in October 2021. The previous low was (-) 7.1 per cent in August 2020.
'If private capex has to kick in, there should at least be 2-3 years of visibility.'
The finance ministry on Thursday sought to clarify that there was no distress in household savings and the data indicated that changing consumer preference for different financial products was the real reason for the change in the pattern of household savings. The clarification comes in the backdrop of Reserve Bank of India data showing that household net financial savings rate is at its lowest in decades, at 5.1 per cent of GDP in FY23 compared to 7.2 per cent of GDP in FY22. The divergence in the data for household gross financial assets and liabilities is not a cause for concern for the government, as the loans have largely been taken to buy real assets or automobiles, the finance ministry said.
The economy may grow by around 7 per cent this financial year as estimated by the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), say economists with various organisations. The first advance estimates for 2023-24 will be released on Friday by the National Statistical Organisation (NSO), an exercise done for calculating ratios such as the fiscal deficit. The interim Budget will be presented on February 1.
Elevated food price-led inflation could become a sore point for markets, which they seem to be ignoring at current levels, observe analysts. Retail inflation in India - as measured by the Consumer Price Index (CPI) - came in at a three-month high of 6.52 per cent in January 2023, compared with 5.72 per cent in December and 5.88 per cent in November 2022. The inflation print for February, according to Madan Sabnavis, chief economist at Bank of Baroda, will be critical for the Reserve Bank of India's monetary policy committee.
The finance ministry on Thursday raised concerns over the possible impact of El Nio conditions on India this year, saying if recent forecasts came true, the country could see lower agricultural output and higher inflation. "Some meteorological agencies predict the return of El Nio conditions in India this year. "If these predictions are accurate, then monsoon rains could be deficient, leading to lower agricultural output and higher prices," the ministry said in its monthly economic review.
Investment growth moderated slightly in the economy during the first quarter (Q1) of the current financial year (2023-24, or FY24), notwithstanding the front-loading of capital expenditure (capex) by the Centre. This was also the case despite a pick-up in demand during the period after two dismal consecutive quarters. Although growth in gross fixed capital formation (GFCF), representing investment, fell to a five-quarter low of 7.96 per cent, the comparison with the first two quarters of the previous year is a bit askew due to the low year-on-year (Y-o-Y) base of those periods.
But the government will present a second tranche of Supplementary Demands for Grants during the Budget session of Parliament in February, when it can seek additional spending.
'We should look at is full year's growth rather than quarter numbers.'
A depreciating rupee, which briefly hit 80 to the dollar on Tuesday, may boost India's exports but price-inelastic imports of crude oil and gold would mean limited relief on the trade deficit, which clocked a record $26.2 billion in June. Due to global risk aversion on the back of geo-political tensions and aggressive policy tightening by the Fed, the dollar has appreciated against most currencies, including the rupee. And, with other currencies depreciating, India's comparative advantage in this respect may be limited.
Evidently, the economy has come out of the low growth phase in the past two years and it does appear the economy will continue to remain in the plus-five per cent range.
There has been a sharp recovery in the headline corporate earnings in the April-June 2023 quarter (Q1FY24), after a dismal showing by early bird companies. The combined net profit of the 983 listed companies that have declared their quarterly results, so far, was up 64.7 per cent year-on-year to record a high of Rs 2.68 trillion in the first quarter, but growth in earnings remained lopsided because most of the incremental gains came from a handful of companies. Moreover, the quarterly numbers showed a continued slowdown in revenue growth.
The wholesale price-based inflation eased for the eighth consecutive month to 4.73 per cent in January on easing prices of manufactured items, fuel and power. The wholesale price-index (WPI) based inflation rate was 4.95 per cent in December 2022 and 13.68 per cent in January 2022. Inflation in food articles, however, rose to 2.38 per cent in January, from (-) 1.25 per cent in December, 2022.
Uncertainty looms over India's export outlook, with the new Covid-19 variant Omicron spreading rapidly across the country's key shipment destinations. With the US and parts of Europe witnessing more than 100,000 Covid-19 cases a day, exporters expect some disruption. However, there may not be an immediate decline in exports from India because the order books remain strong at least for the next few weeks, they said.
The Union government could target a fiscal deficit of 5.8-6 per cent of nominal GDP for 2023-24, and it should continue its capital expenditure push and look to simplify the personal income tax regime, economists recommended Finance Minister Nirmala Sitharaman and her team during their pre-Budget interaction on Monday. Starting last week, Sitharaman had eight pre-Budget consultations this time. More than 110 invitees representing seven stakeholder groups participated in these meetings, the finance ministry said in a statement. The stakeholder groups included representatives and experts from agriculture and agro-processing industry; industry, infrastructure & climate change; financial sector and capital markets; services and trade; social sector; trade unions and labour organisations; and economists.
JP Morgan's decision last week to include Indian government bonds in its Government Bond Index-Emerging Markets (GBI-EM) index and the index suite from June 2024 may be a sort of blessing for India, as the move is estimated to result in an inflow of $25 billion of foreign portfolio investments into the country. The development comes at a time when the spread between the benchmark 10-year government of India bond and the 10-year US government bond has declined to its lowest level in more than 17 years. Low yield spreads make Indian bonds less attractive to foreign portfolio investors (FPIs).
The Reserve Bank of India (RBI) will maintain the policy repo rate at 6.5 per cent during its upcoming June 8 announcement, considering the easing of retail inflation in April and the potential for further decline, indicating the effectiveness of previous policy rate actions, anticipate experts. Headed by Reserve Bank Governor Shaktikanta Das, a meeting of the six-member Monetary Policy Committee (MPC) is scheduled for June 6-8. The decision of the 43rd meeting of the MPC would be announced on Thursday, June 8.
The economy has shown sharp resilience in the past and has also bounced back in good time. We could hence expect a similar trajectory next year, observes Madan Sabnavis, chief economist, CARE Ratings.
'We will have to wait for one more year to cross the 7% mark, which should be possible in the absence of any disruptive reform,' points out CARE Ratings Chief Economist Madan Sabnavis.
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