India's fiscal policy is not supportive of monetary measures that the country's central bank is employing to fight rampant inflation, the prime minister's honorary economic advisor and former International Monetary Fund chief economist Raghuram Rajan said, while singling out the proposed Food Security Bill as a particular cause for concern.
What might be useful is targeted assistance to those sectors and individuals that are disproportionately affected, suggests Mihir S Sharma.
The government on Monday said that the stimulus packages to perk up the economy during the slowdown are not likely to be withdrawn this fiscal and the exit when it happens will be a gradual one.
One of the major contributors for the decline in growth will be the monsoon deficiency, which also affects non- agricultural sectors through demand effects, RBI report said.
These are valuable suggestions and one hopes the Budget will make a start on that.
Stating that a weak fiscal position continues to constrain India's sovereign ratings, Fitch said the next government's medium-term fiscal policy will be of particular importance from a rating perspective.
The economic growth is likely to moderate to 6.1 per cent, slowest in over seven quarters, from 6.6 per cent last year same period.
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.
Following are the highlights of the Economic Survey 2022-23 tabled in Parliament on Tuesday
The Reserve Bank on Friday retained the inflation forecast for 2023-24 at 5.4 per cent, and vowed to take timely measures to prevent any spillovers of global food and fuel price shocks. Stressing that the Reserve Bank has identified high inflation as a major risk to macroeconomic stability and sustainable growth, Governor Shaktikanta Das said the September retail inflation number may be lower than August and July prints. The headline inflation based on Consumer Price Index (CPI) moderated to 4.6 per cent in first quarter of 2023-24 as compared to 7.3 per cent in the same period a year ago.
The parlous state of Asia's third largest economy was reflected in the rupee's 18 per cent plunge against the dollar to all time lows since May, when signals emerged that the US Federal Reserve was considering winding down an easy money strategy that had benefitted emerging markets like India.
Central bank estimate economy to grow at 5.5 per cent.
Under the Fiscal Responsibility and Budget Management Act, the Centre should have eliminated the revenue deficit and brought down the fiscal deficit to 3 per cent of gross domestic product by March 2008. This target was extended by a year. Then, due to the global economic crisis, the government decided to suspend implementation of the FRBMA. As a result, the fiscal deficit for 2008-09 crossed 6 per cent of GDP and is projected at 5.5 per cent in fiscal 2009-10.
Prime Minister Manmohan Singh has urged the world economies to continue with stimulus packages till 2010 and avoid all kinds of protectionism including in the financial sector to battle the global economic slowdown.
The 6-member Monetary Policy Committee, headed by Reserve Bank of India Governor Urjit Patel, in its fifth bi-monthly review, kept the repo rate unchanged at 6 per cent and reverse repo at 5.75 per cent.
India is set to attract foreign direct investment of $40 billion in fiscal 2008-09 with overseas investors betting big on the manufacturing sector in the world's second fastest growing economy.
With high prices remaining a concern, Prime Minister's Economic Advisory Council chairman C Rangarajan on Wednesday said all policy measures, like rate hikes and intervention in grain markets, will be undertaken to bring down inflation to comfort zone of 4-5 per cent.
Bimal Jalan, has recommended to the government that it cut fiscal deficit to 3.6 per cent of the GDP during 2015-16.
Governments in economies of all sizes and at all stages of development are struggling with the tax policy choices available to them.
Speaking at CNBC TV 18's business leadership awards event, Sitharaman made it clear that she was not expecting a jump in the number either.
The wholesale price-based inflation eased to a 29-month low of 1.34 per cent in March on easing prices of manufactured products and fuel items, even though food articles turned expensive.
The government should focus on growth, inflation management, fiscal policy and relationship with the Reserve Bank of India, according to RBS.
The Reserve Bank of India on Friday said it will come out with its annual monetary policy for the next fiscal on April 20, amid expectations that the central bank will hike interest rates to tame the rising inflation
Growth is the only way poverty can be reduced, says JPMorgan Chase's Jahangir Aziz.
The Reserve Bank of India on Thursday opted for a pause second time in a row, maintaining key benchmark policy rate at 6.5 per cent as inflation moderates. The rate increase cycle was paused in April after six consecutive rate hikes aggregating to 250 basis points since May 2022. Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) unanimously decided to keep the rate unchanged at 6.5 per cent.
Rajan strongly defends RBI's decision to hold the key rates in the absence of any new data points.
The RBI expects change, presumably commencing in the next Budget, but must hold its current view until this actually happens.
At the same time, banking sources close to the development said the central bank could raise its growth target from 5-6 per cent to 6.5 per cent to accommodate the impact of an improving monsoon and the growth impetus provided through various fiscal and monetary stimulus packages earlier in the year. The cautious outlook on interest rates is primarily to accommodate rising inflationary expectations in the economy.
'It is far too early to celebrate the numbers.' 'They are still fairly weak compared to the pre-pandemic level.'
Retail inflation rose to three-month high of 4.81 per cent in June, mainly on account of hardening prices of food, according to the government data. Inflation based on the Consumer Price Index (CPI) stood at 4.31 per per (revised upward from 4.25 per cent) in May and 7 per cent in June 2022. The inflation, however, remains within the RBI's comfort level of below 6 per cent.
By any economic theory or doctrine, this is no Budget that supports economic recovery, whether through supporting aggregate demand, or through expansionary stimulus, declares Rathin Roy.
Less-than-expected rainfall and a poor spatial distribution, experts say, can rekindle fears of a rise in food and fuel inflation that can have an impact on the RBI's monetary policy. The fear of less than optimal rainfall due to El Nino this year, analysts believe, is the biggest short-term risk for the markets, which they said has not been fully priced in yet by them. Monsoon set over Kerala on June 08, a week later than its scheduled date.
Prime Minister Narendra Modi made a pitch for electing a strong and stable government in an uncertain world beset by geopolitical tensions as the Bharatiya Janata Party on Sunday released its manifesto, prioritising development and welfare while shunning populist measures and contentious issues like the National Register of Citizens (NRC).
With only three days to go before Finance Minister P Chidambaram delivers the Budget in Parliament, market expectations with respect to reforms are running high.
The BJP is the preferred choice because it offers what the Mughals and later British offered in their time: A stable polity and an environment in which business could function, explains T N Ninan.
After raising interest rate by a cumulative 250 basis points in 11 months, the Reserve Bank of India (RBI) on Thursday unexpectedly kept benchmark rate unchanged as global banking woes added uncertainty to the economic outlook. Five out of six members of MPC voted to remain focused on the withdrawal of accommodation to ensure inflation aligns with target while focusing on growth, RBI Governor Shaktikanta Das said on Thursday. The Monetary Policy Committee of the central bank decided to take a pause after a rate hike seen in previous six consecutive policies.
The move is expected to create space for more budding entrepreneurs in the country to be eligible for self-certification, relaxed public procurement norms, rebate in patent filing, start-up funding, investment and easier closure compliance.
The mutual fund industry continued with the positive momentum in the September quarter, attracting Rs 34,765 crore, although it was a massive reduction as against the Rs 1.85 lakh crore inflow in the preceding quarter, primarily due to withdrawal from debt segment. Most of the asset classes saw net inflows during the July-September period of the current financial year barring the fixed-income or debt segment, which witnessed net outflows. Overall, flows started on a strong note during the quarter under review, with net inflows of Rs 82,467 crore in July, which dipped to Rs 16,180 crore in August and ended with a disappointing Rs 63,882 crore of net outflows in September, according to a report by Morningstar India.
S&P Global Ratings on Monday kept its forecast for India's economic growth unchanged at 6 per cent in the fiscal year starting April 1, before rising to 6.9 per cent in the following year. In the quarterly economic update for Asia-Pacific, S&P saw inflation rate easing to 5 per cent in 2023-24 fiscal, from 6.8 per cent in the current financial year. It saw India's gross domestic product (GDP) likely growing by 7 per cent in the current financial year ending March 31 (2022-23), before slowing to 6 per cent in the next 2023-24 fiscal.
Prices may go up because of higher energy costs, caused by the rise in shipping charges, with commercial vessels taking a longer route to avoid the troubled Red Sea region, the finance ministry said on Monday. Iran-backed Houthi rebels of Yemen are repeatedly attacking ships in the Red Sea. While the global economy is grappling with challenges such as sticky inflation, sluggish growth, and mounting fiscal pressure, India's external sector could face "potential risks" due to the ongoing geopolitical tensions, according to the finance ministry's report on the review of the Indian economy.
