Mayaram also said as of now, a shutdown of the US government is not likely to have a major impact on the Indian economy.
The union government is expected to cut two per cent import duty in gold in the forthcoming budget, as local jewellers run out of inventory, a leading US brokerage said.
The Reserve Bank of India (RBI) has identified "climate shocks" as a risk to food inflation rates and overall price rise while stating that the outlook for the country's economic growth remains bright. In its Annual Report for 2023-24, released on Thursday, the central bank said easing supply-chain pressures, broad-based softening in core inflation, and early indications of an above-normal southwest monsoon meant well for the inflation outlook in 2024-25. "The increasing incidence of climate shocks, however, imparts considerable uncertainty to the food inflation and overall inflation outlook," said the RBI while noting headline inflation moderated by 1.3 percentage points on an annual average basis to 5.4 per cent in 2023-24.
If the fiscal deficit target of 4.9% of GDP has to be met for 2024-2025, which the government must in view of the uncertainties and challenges emerging both domestically and globally, the finance ministry may see in the composition of the current year's capex a sliver of hope, notes A K Bhattacharya.
The official said there are both challenges and opportunities for India as many of its competitor countries in exports, such as China Vietnam, Bangladesh, Cambodia and Thailand, face higher duties.
Outlook for external sector is the most favourable.
The Budget should use the extra RBI surplus to better effect, suggests A K Bhattacharya.
'Each state is unique, but when it comes to finance, the fundamentals cannot be different.'
India's growth rate is expected to improve to 7 per cent by FY 2017, while inflation and current account deficit are likely to moderate in the coming years, a Citigroup report said.
It added that industrial output is on decline due to poor demand and lack of infrastructure.
'The Budget must be pro-growth, focusing on infrastructure creation while also managing the fiscal deficit.'
Three years after India declared its goal to become a net-zero economy by 2070, the policy design for achieving the target has begun, with the NITI Aayog forming dedicated multi-sectoral committees to prepare a transition plan. In 2021, India joined a select group of nations that set a target year for becoming net-zero carbon economy. At COP26 in Glasgow, Prime Minister Narendra Modi outlined a five-pronged 'Panchamitra' climate action target for India and committed to a net-zero target by 2070, joining nations like the US, the UK, and China.
The senior Congress leader was in New Delhi to campaign in Maharashtra Assembly polls.
India's net oil import bill could widen to $101-104 billion in current fiscal from $96.1 billion in 2023-24 and any escalation in the Iran-Israel conflict could impart an upward pressure on the value of imports, ICRA said on Tuesday. The domestic rating agency said based on its analysis, lower value of Russian oil imports is estimated to have led to savings of $7.9 billion in 11 months (April-February) of 2023-24, up from $5.1 billion in 2022-23.
The central government's fiscal deficit touched 32.6 per cent of the annual target in the current financial year till August as against 31.1 per cent recorded a year ago, according to official data released on Friday. In actual terms, the fiscal deficit -- the difference between expenditure and revenue --- was Rs 5,41,601 crore during the April-August period of this financial year. Fiscal deficit is an indicator of the government's borrowings from the market.
The central government's fiscal deficit touched 67.8 per cent of the full-year target at the end of January due to higher expenses and lower revenue realisations, according to official data released on Tuesday. In actual terms, the fiscal deficit or gap between the expenditure and revenue collection during April-January period stood at Rs 11.9 lakh crore, as per the data from the Controller General of Accounts (CGA). The fiscal deficit in the comparable period of 2021-22 was 58.9 per cent of that year's Revised Estimate (RE) in the Budget.
Without naming India, S&P said it expects that in regions where inflation already exceeds targets, or which are vulnerable to capital flight, central banks will be forced to raise interest rates.
Two senior ministry officials, who declined to be named, said the aim was to attract more capital flows from wealth funds in West Asian countries.
Rajan says, this is a time where countries should be focusing on getting the macro stability in order
India, desperate to trim a gaping current account deficit, took a slew of measures last year to curb demand for bullion
The deficit data was the latest in a run of positive signs for the sluggish domestic economy and could put India in a better position should the Fed start tapering, than in the summer when the rupee hit a record low.
Ahead of the Budget, Finance Minister Arun Jaitley on Tuesday underlined the need for tax reforms and quick decision making to ensure stability in policy regime.
Rating agency expects current account deficit to remain at a modest 1.4% at end of FY16 and stay at similar level till 2018
The Reserve Bank of India's (RBI's) outstanding net forward purchases of US dollars fell by more than 50 per cent from the last quarter of FY22 to $30.86 billion in the June quarter (Q1). The net forwards position was at $65.79 billion at the end of the last fiscal year. The purchases fell by $18.33 billion in June as the central bank intervened in both the forwards and the spot market in order to protect the rupee from excessive depreciation in the face of a widening trade deficit.
A sharp sell-off in the Indian equities markets after a spike in crude oil prices should not be surprising. Historically there is a negative correlation between stock valuations in India and the price of Brent crude oil, which is the benchmark for the Indian crude oil basket. Between 2011 and 2014, crude oil traded above $100 a barrel for an extended period, the Sensex-trailing price/earnings (P/E) was 18X, on average, during the period, nearly 22 per cent lower than the current index P/E of 23X.
On the back of sound macroeconomic policies and softer commodity prices, India's growth momentum is likely to be sustained in 2023-24 in an atmosphere of easing inflationary pressures, said the Reserve Bank's annual report released on Tuesday. It, however, added that slowing global growth, protracted geopolitical tensions and a possible upsurge in financial market volatility following new stress events in the global financial system could pose downside risks to growth. "On the back of sound macroeconomic policies, softer commodity prices, a robust financial sector, a healthy corporate sector, continued fiscal policy thrust on quality of government expenditure, and new growth opportunities stemming from global realignment of supply chains, India's growth momentum is likely to be sustained in 2023-24 in an atmosphere of easing inflationary pressures," it said.
Govt raises import duties again, misses the point.
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's economic growth slowed to near two-year low of 5.4 per cent in the July-September quarter of this fiscal due to poor performance of manufacturing and mining sectors, but the country continued to remain the fastest-growing large economy, data showed on Friday. The gross domestic product (GDP) had expanded by 8.1 per cent in the July-September quarter of 2023-24 fiscal. The previous low level of GDP growth at 4.3 per cent was recorded in the third quarter (October-December 2022) of financial year 2022-23.
Former prime minister Manmohan Singh said India is poised to take advantage of globalisation and engage in trade to finance its imports through exports.
Slight recovery in growth is expected only in July-September.
Describing RBI policy as not surprising, State Bank of India Managing Director and Chief Financial Officer Diwakar Gupta said there is room for the central bank to look at the long-term and not too much on the short-term issues like rupee fall and the CAD.
India's current account deficit which narrowed in the second quarter of this fiscal, however, is likely to widen during the second half of FY 2013-14 as seasonal demand bring in more imports, an HSBC report says.
India's real GDP growth will decline marginally to 6.3 per cent in 2024 from the 6.4 per cent estimated for 2023, an American brokerage firm said on Monday. The next calendar year will be of two halves, wherein the government spending before the upcoming General Elections will be the key driver for growth, while after the elections, it will be the re-acceleration in investment growth, especially from the private sector, Goldman Sachs said in a report. From a fiscal year perspective, the brokerage said it expects growth to accelerate to 6.5 per cent for FY25 from the 6.2 per cent it has projected for the ongoing FY24, it added.
Leading brokerages Nomura and Barclays on said current account deficit, which unexpectedly improved to 4.8 per cent in 2012-13, but still at a historic high, could moderate further this fiscal on slowing gold imports and cheaper commodities.
Reserve Bank of India Governor Shaktikanta Das on Friday said the country's economy is an island of stability despite two Black Swan events and multiple shocks. "In an ocean of high turbulence and uncertainty, Indian economy is an island of macroeconomic and financial stability," Das told reporters during the post policy press conference. He said the financial stability, macroeconomic stability and resilience of growth is being witnessed despite two Black Swan events happening one after the other and multiple shocks.
Reserve Bank Governor Shaktikanta Das on Monday said with the country's foreign exchange reserves at $677 billion, it is comfortably placed to deal with any spillover effects and for financing of the current account deficit. Over the last three years, the country's foreign exchange reserves have surged by $270 billion. He said as per the latest data, the foreign exchange reserves are $622 billion.
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In August 2014, imports stood at $ 2.06 billion. Higher imports will have adverse bearing on India's current account deficit (CAD).
According to a research note by Barclays, which covered foreign institutional investors located across the major financial centres, most investors are bullish on the rupee and expect the currency to either remain stable or appreciate in the next six months.
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