India's manufacturing sector activity contracted for the second consecutive month in September as both output and new orders witnessed a decline, an HSBC survey said.
The Reserve Bank of India fears that rising current account deficit in the United States could adversely impact interest rates and inflation globally and India could not be an exception.
With the fiscal deficit target staring at the government, the FY25 Budget has limited expenditure options, points out A K Bhattacharya.
It is important to understand that debt investors are a conservative lot and, in general, most such investments are hedged out of foreign exchange risk to simply earn an arbitrage profit, rather than carry the risk to possibly increase their yield.
On Tuesday, Economic Affairs Secretary Arvind Mayaram told reporters that economic growth this financial year would be over five per cent and the numbers in the second quarter would be better than the first quarter which yielded gross domestic product expansion of 4.4 per cent, a four-year low.
John Williamson, Senior Fellow in the Institute of International Economics, thinks that the rest of the world will be impacted much more than the US, while former RBI Governor Bimal Jalan says that there is no concrete data to prove the argument.
The finance minister should worry more about long-term problems than short-term imbalances.
With US Fed increasing interest rates to 3%, equity money flows into emerging markets like India could be impacted in the medium term.
To meet the revised estimates for 2019-20, the central government will have to garner Rs 5.03 trillion in total revenues in March, which has seen the worst phase of the coronavirus pandemic so far and the resultant lockdown.
The government had increased customs duty on gold to 10 per cent and banned import of gold coins and medallions, while the RBI linked imports of the metal to exports.
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The agency's lead analyst Art Woo added that fiscal management is a challenging task.
'A time-wise, as well as price correction, so that the market can absorb the gains made over the past 17 months.'
The government had pegged the fiscal deficit for 2020-21 at Rs 7.96 lakh crore or 3.5 per cent of the GDP in the budget presented by Finance Minister Nirmala Sitharaman in February.
'If Urjit Patel had resigned after the five-state elections results people would have taken a different view. So this was the right time for him to resign.' 'He rightly resigned as he felt the differences with the government were not getting settled.'
According to the report by the global financial services major, the FY2013-14 CAD is expected to be within $36 billion or 2 per cent of GDP, and this fiscal year CAD is likely to be slightly higher but contained at 2.3 per cent of GDP.
India's trade deficit shrank to a 10-month low in December as global oil prices tumbled and demand for gold fell, auguring well for Indian current account balance and the rupee.
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The Indian currency had hit record low of 57.32 against a dollar in June last year.
The GDP growth for 2013-14 has been lowered to 5.3%, from 6.4% in April.
The decline in gold imports has helped in narrowing the country's trade deficit to $106.84 billion during the eight-month period under review as against $133.74 billion in the year-ago months.
In the mid-quarter review on December 18, the Reserve Bank left key policy rates unchanged but said it will hike interest rates if inflation does not subside.
It has mostly been a one-way street for markets that have moved up sharply since July. The front-line indices - the S&P BSE Sensex and the Nifty50 - have gained 6.7 per cent and 7.3 per cent, respectively, in the past three months. The rally in mid- and small-caps has been sharper, with both indices surging 14 per cent and 9 per cent, respectively, during this period. This sharp run has made analysts at Jefferies cautious.
NITI Aayog vice chairperson Rajiv Kumar tells Indivjal Dhasmana that additional funds could be generated through divestment, and that the fiscal deficit should be widened while focusing on the revenue deficit.
There has been sizeable rise in external commercial borrowing and and rupee denominated Non-resident Indian deposits.
Short-term lending rate unchanged at 7.75 pc.
Thanks to rupee depreciation, India has a chance to fundamentally rework its stifled manufacturing sector.
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.
Highlights of RBI's third quarter review of monetary policy.
India Ratings principal economist Sunil Kumar Sinha said the Brexit is a mixed bag for the country.
The deficit stood over Rs 8 trillion in the first seven months of the current financial year. Non-tax revenues, comprising transfers from the RBI and dividends of the public sector units, shored up the Centre's revenues.
Addressing bankers and economists at Bancon 2013, a flagship event of the Indian Banks' Association, Chidambaram told the lenders to deal firmly with wilful defaulters, but handhold those who are reeling under the impact of the economic slowdown.
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The toxic brew of fiscal populism, crony capitalism and bad economic management has ensured the collapse of economic growth, industrial stagnation, stubbornly high consumer inflation, declining savings and investment, shrinking employment opportunities, and a dangerously vulnerable external financing situation.
Reserve Bank Governor Shaktikanta Das on Friday said 67 per cent of the decline in the foreign exchange reserves since April was due to valuation changes arising from strengthening US dollar and higher American bond yields. The forex reserves, which stood at $606.475 billion as on April 2, have declined to $537.5 billion as on September 23. It was also the eighth straight week when the reserves declined.
Liquidity in the banking system has slipped into a deficit for the first time in three weeks, prompting banks to borrow the largest quantum of funds from the Reserve Bank of India (RBI) in around a month and a half. The key catalyst for the sudden tightening in liquidity was due to outflows on account of advance tax payments, which occur towards the end of a quarter. Analysts also cited other factors such as a currency leakage and possible interventions by the RBI in the foreign exchange market, which contributed to the tighter liquidity conditions.
Foreign investors have poured in a whopping Rs 9,600 crore (Rs 96 billion) in the stock market so far this month, mainly on the hopes of a stable government in general elections starting next month.
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Traders say the outlook for the rupee has improved on the back of a sharp narrowing in the current account deficit after government and central bank emergency measures such as curbing gold imports.
Uptick in growth projected in second half of current fiscal based on 10 factors including higher FDI flows, build up of demand pressure, positive GST revenue growth
To enable widen the fiscal deficit beyond the permissible limit under the present legislation, the government may have to propose amendment to the FRBM Act in the Finance Bill.
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