India's economy is in much better shape to weather tighter U.S. monetary policy.
Gold imports tick up 10.47% to $2.42 billion in May.
Imports also fell for the eighth consecutive months, down 0.75 per cent to $41.14 billion in January, widening the trade deficit to a seven-month high of $15.17 billion.
Even as the bilateral relationship between the two neighbouring countries remains hostile, there is growing coordination between India and Pakistan on one multilateral forum - the World Trade Organization (WTO). Both countries have made two joint submissions at the WTO as co-sponsors in the past two months. In June, Pakistan joined India, Cuba, and 44 African countries, seeking sufficient flexibility in intellectual property rights for developing countries to fight the Covid-19 pandemic.
The challenge of achieving fiscal deficit targets for the next two years seems daunting.
The windfall taxes on domestic crude oil production and fuel exports will generate close to $12 billion (Rs 94,800 crore) for the government in the remainder of the current fiscal while trimming profits of firms such as Reliance Industries Ltd and ONGC, Moody's Investors Service said Tuesday. On July 1, the government imposed windfall gain taxes on the export of petrol, diesel and aviation turbine fuel (ATF), and on the domestic production of crude oil. It has also mandated exporters to meet the requirements of the domestic market first.
Prime Minister Singh has assigned a senior Congress leader to placate the President, who is upset with Finance Minister P Chidambaram, reports Anita Katyal.
It is high time to manoeuvre the rupee more effectively and predictably, even as it has to be recognised that such tweaking of the rupee needs to be accompanied by reforms to the real sector and factor markets.
The currency's relatively stable performance even as the US announced tapering showed India's better preparedness to deal with any fallout of such foreign fund outflows.
Finance Ministry is expecting a rating upgrade by credit agencies by the year-end on the back of policy initiatives.
The government further said the gross tax revenue as a per cent of GDP is expected to increase to 12.1 per cent of GDP in 2019-20 and stabilise at that level in 2020-21 before climbing up to a level of 12.2 per cent of GDP.
Analysts said any mass cancellation of the coal blocks could lead to a surge in imports and widen the trade deficit given the impact on domestic production.
The central bank measures though are also taking a toll on the banking sector, which is heavily reliant on short-term money markets for capital.
While the import of gold fell by about 11 per cent to $2.58 billion in February as against $2.89 billion in the corresponding month last fiscal, inward shipments of petroleum products were down by nearly 8 per cent to $9.37 billion.
The rupee breached the 80-mark against the dollar on Tuesday. The steady depreciation in the value of the rupee against the US dollar is likely to prove expensive for corporate India. The listed companies' revenue expenses in foreign currency or imports exceed their export revenues or revenue earnings in forex. In their latest financial year, BSE500 companies, excluding banks and non-banking finance companies and insurance (BFSI), reported combined forex expenses of Rs 12.31 trillion against forex earnings of around Rs 10 trillion.
After a turnaround in performance by Indian equity markets since July that has seen the S&P BSE Sensex and the Nifty50 wipe out the year-to-date losses, analysts suggest investors start nibbling into stocks that are focused on the domestic economy. While they say intermittent corrections, led by policies of global central banks and other economic data, cannot be ruled out, analysts expect India's relative outperformance among global equity markets to continue as it looks better placed with a healthy economic recovery, and remains one of the fastest growing major economies. In this backdrop, Neeraj Chadawar, head of quantitative equity strategy at Axis Securities, believes that amid global slowdown, aggressive tightening by the central banks, and preference for domestic interests first (by the local government), export-oriented themes are likely to be muted or will deliver conservative returns in the near-term.
Rupee, he said, is not in shambles and "we should not be overtly pessimistic".
India's economic growth is now 'extremely fragile' and needs all the support that it can get, as private consumption and capital investment are yet to pick up, RBI Monetary Policy Committee (MPC) member Jayanth R Varma said on Friday. Varma further said out of the four engines of growth for the economy, exports and government spending supported the Indian economy through the pandemic, but other engines need to pick up the baton now. " I like to think in terms of the four engines of growth for the economy: exports, government spending, capital investment and private consumption. "...while exports cannot be the main driver of growth because of the global slowdown, government spending is necessarily limited by fiscal constraints," he told PTI.
Emerging markets and Asia may be first in the firing line
Narendra Modi has earned a ranking of eight out of 10 in an India Inc survey.
Accounting for the first Advance Estimates for 2017-18, an additional planned borrowing of Rs 200 billion, the fiscal deficit could come in at 3.35 per cent of GDP.
Government on Friday hiked the import tariff value on gold and silver to $433 per 10 grams and $699 per kg, respectively, taking into account the volatility in the precious metals' global prices.
'As long as economic growth remains steady, creating jobs and generating stable incomes, the rise in home loans should not create problems.' 'If the growth trajectory changes course over the medium term and interest rates rise along with inflation, the expanding trend in home loans may not sustain.'
.jpg)
Pranab Mukherjee, who himself was Finance Minister, said he was 'not disappointed' by the current economic situation in the country.
The rupee has had a volatile run in the past one week.
Policymakers should aspire to restore the pre-Independence environment where the rupee was trusted and used all over South Asia, in Southeast Asia, in West Asia, and in East Africa, suggests Ajay Shah.
Divestment in BPCL, SCI, Concor, NEEPCO, and THDC would help the Centre keep its fiscal deficit in check in the wake of subdued tax revenues and a Rs 1.45-trillion hit for the exchequer from corporation rate cuts.
We import from China not because we love China, but because they sell us these things at cheap prices, points out Rathin Roy.
A moderate recovery in Indian factories, exports and investments were probably the main drivers for an increase in overall growth in the quarter through March.
In 2013, India suffered its worst currency crisis in more than two decades but has regained the confidence of foreign investors in part after its current account deficit has narrowed sharply and its foreign exchange reserves hit a record high
Emerging market currencies including Indian rupee are likely to remain under pressure, though depreciation is expected to slow from here, Barclays said in a research report.
India must announce liberal policies to attract foreign investors.
Seeking to dispel the perception of gloom and pessimism, Finance Minister P Chidambaram on asserted in the Lok Sabha that rupee will correct itself and the growth will bounce back.
Finance Minister P Chidambaram will woo foreign investors to invest in India as he begins his nine-day visit to the US on Tuesday.
The government has promised to keep the deficit at 4.1%
Most immediately, he pledged to move slowly if needed in winding down an oil window that provides dollars directly to state-run oil companies
The fiscal deficit in the first three months of current fiscal stood at Rs 2.86 lakh crore or 51.6 per cent of Budget estimates for 2015-16.
Huge gold imports have put pressure on the country's CAD, which in turn is affecting the value of rupee.
Barring rice, spices, iron ore and pharmaceuticals, all the remaining 26 key sectors registered negative growth in May. Imports too plunged 51 per cent to $22.2 billion in May.
© 2026 Rediff.com - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances