Prime Minister Narendra Modi had announced a relief package of Rs 20 lakh crore or about 10 per cent or GDP last week. However, many of the measures unveiled have been in the form of moves like loan guarantees which do not entail an immediate fiscal cost.
'Success will require political skill, not just economic expertise'
While headline and core WPI are stuck in a disinflationary phase, the retail measure is inching north.
The most pressing issue facing the financial sector is the rising stock of non-performing assets in the banking system
India's economy recovered faster than expected in the September quarter as a pick-up in manufacturing helped GDP clock a lower contraction of 7.5 per cent and held out hopes for further improvement on better consumer demand. The gross domestic product (GDP) had contracted by a record 23.9 per cent in the first quarter of the 2020-21 fiscal (April 2020 to March 2021) as the coronavirus lockdown pummelled economic activity.
The drop in headline inflation to a 40-month low of 5.96 per cent for March has increased the possibility of a rate cut by the Reserve Bank at its May 3 annual policy, analysts and rating agencies said.
With government surviving the winter session and the required reforms in place, two events will decide the movement of markets - outcome of US fiscal cliff and RBI's stance on the rate cut.
Gold has pushed lower as a result of Chinese selling.
The Rs 20 lakh crore package includes Rs 1.7 lakh crore package of free foodgrains to the poor and cash to poor women and elderly, announced in March, as well as the Reserve Bank's liquidity measures and interest rate cuts.
A continued focus on low inflation will be important to keeping gold imports, IMF said.
The central bank has lowered its policy rate twice so far in 2015.
With India's GDP clocking a lower contraction of 7.5 per cent in the September quarter, industry and experts expressed confidence of further recovery in the coming months and said the government's actions are bearing fruit. In a tweet, Vedanta chairman Anil Agarwal said, "Q2 #GDP numbers show that economy is recovering. Government's efforts on stimulus and reform are showing results. Hopefully, we will have positive growth in H2 FY21 and double digit growth in FY22."
RBI is expected to discuss about the impact of GST in its monetary policy.
The benefit coming in from the Rs 1.45 lakh crore tax giveaways will also help companies to cut prices by up to 5 per cent to boost consumer demand, which has been sagging and is one of the prime reasons for the deepening slowdown.
Fitch reaffirmed India's rating at 'BBB-' with a Stable Outlook saying the rating balances a still strong medium-term growth outlook compared with similar category peers and relative external resilience stemming from solid foreign-reserve buffers against high public debt, a weak financial sector and some lagging structural factors, including governance indicators and GDP per capita.
Raghuram Rajan, who has been pilloried by his critics for keeping interest rates high and has also been accused of stifling growth.
Market players said a big upmove by the market will depend on policy action by the government to revive economic growth and corporate earnings revival.
As the reform process is expected to gain further momentum, the Indian rupee will continue to outperform its Asian peers, which are likely to weaken further against the US dollar in 2015, says an HSBC report.
'A loss of seats for the Trinamool in this election will weaken its hold in Bengal, which will not augur well before the assembly election in 2021.'
After a contraction in the current financial year, India's economy is forecast to bounce back with a sharp growth rate of 9.5 per cent next year provided it avoids further deterioration in financial sector health, Fitch Ratings said on Wednesday. The coronavirus pandemic will lead to shrinking of the already slowing economy in 2020-21 that started in April. Fitch Ratings forecast a 5 per cent contraction in the GDP in the ongoing financial year.
What is required from government is intellectual framework.
He added that the risks can increase if the Chinese slowdown gathers more speed.
The case for deregulation of the savings bank deposit rate by the Reserve Bank of India (RBI) is becoming stronger day by day. It is time India returned to a system favoured by most modern economies around the world.
Even as the rupee plunged to a 10-week low against US dollar on Friday erasing almost the entire gains it made since the recent reform waves, the Finance Ministry on Saturday expressed optimism of a recovery before the fiscal-end and ruled out any intervention by RBI.
The Niti Aayog vice chairman noted that green shoots of recovery are already visible in multiple sectors. In 15-16 sectors, businesses are coming back to pre-COVID levels," he said.
The Financial Sector Legislative Reforms Commission had in a report last year proposed a unified regulator for the entire financial sector -- markets, insurance, commodities and pension. It had, however, proposed to keep banking out of its purview for now.
On Aug 11, the Chinese central bank surprised markets by devaluing the yuan by nearly 2 per cent.
'Willing to spend is different from when to spend and how much to spend'
Nine of 10 bankers who attended the meeting admitted their sanctioned loan pipeline was shrinking fast due to tepid demand.
The system envisaged under the FRDI Bill, if implemented properly, would help improve the efficiency of capital allocation without harming consumers, and without risking the stability of financial firms, says Ajay Shah.
Chidambaram welcomes CRR cut as a good small step forward.
The report admits that converting MSP to a floor price of auction on the eNAM portal will not completely solve the problem as the current data shows that average modal prices in e-NAM mandis is lower than the minimum support price in all commodities except urad.
Human resource, or HR, development is one of the key portfolios that K C Chakrabarty handles as the Reserve Bank of India (RBI) deputy governor.
The Reserve Bank of India has already reduced the policy rate by a total of 75 basis points, or 0.75 per cent, since January.
Urjit Patel's reappointment will raise market hopes that Rajan, will also be offered an extension when his tenure ends in September.
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.
Prime Minister Narendra Modi will hold discussions with public sector banks (PSBs) and financial institutions to draw up an action plan for banking reforms
The RBI wants to include shares and options within the variable salary of the CEOs, proposed to be capped at 200 per cent of their fixed salary; the floor for it is 50 per cent.
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The worst performing Asian currency of the year so far hit a new life low of 61.80 rupees per dollar on Tuesday, breezing past a previous low of 61.21 hit on July 8. Central bank intervention helped the rupee recover, but by Wednesday it was sliding once again, to stand around 61.41 by 1.30 p.m.
'...Unless we muck up our policies.' 'We have to become a modernised economy.' 'Our institutions should be stronger. And that is most important.' 'The rule of law should prevail and contracts should be enforced.' 'Above all, we have to recognise the importance of globalisation.' 'It is in our favour at this stage. We should grow and become globally competitive.'
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