The wait for India to become a $5-trillion economic powerhouse by 2024-25 (FY25) is going to take longer than what the finance ministry had originally intended, according to the International Monetary Fund (IMF). The vision will instead be achieved in 2028-29 (FY29), reveals the IMF data, illustrating a four-year delay. Chief Economic Advisor (CEA) V Anantha Nageswaran had in February said India would become a $5-trillion economy by 2025-26 or the following year, on the back of 8-9 per cent sustained growth rate in real gross domestic product (GDP). However, the IMF data conveys that the economy will be $4.92 trillion in FY28, clearly alluding to the fact that the target will be realised in FY29.
The Reserve Bank of India (RBI) on Friday decided to leave the benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance, implying rate cuts in the future if need arises to support the economy hit by the Covid-19 pandemic.
There is a narrow chance that the central bank may cut rates in the future, according to a poll of 15 economists and treasurers.
By no means do economists see the Reserve Bank of India stop at just a 25-bp cut. Some of the economists such as Soumyakanti Ghosh of State Bank of India are of the firm view that rates have room to fall by a total of 75 bps in the current financial year, starting with 25 bps in the August 7 policy.
Instead of only focusing on the tenure for which the best interest rate is available, investors should also focus on their own investment horizon.
Chances of a rate cut in April improve if core inflation continues to ease, growth falling below the projected 7.2% for FY19 and if the global trade slowdown exacerbates.
S&P expects India to grow at 7.4 per cent in 2015, similar to the central bank's forecast for the fiscal year ending in March.
North Block and Mint Road seem likely to now stick to the earlier convention of the RBI governor coming to Delhi and being the only MPC member meeting the finance minister and senior bureaucrats on pre-policy meetings
The IHS Markit India Manufacturing PMI rose from 51.2 in November to 52.7 in December. Factories benefited from a rebound in demand, and responded by scaling up production to the greatest extent since May. As per the survey, new work orders witnessed marked improvement, with the pace of expansion picking up to the fastest since July.
After consumer price index jumped the 6.3-per cent mark in May and wholesale inflation set a record of 12.94 per cent, house economists at Swiss brokerage UBS Securities have warned that the country is facing more upside risks on the inflation front that is set to averaging at 5 per cent for the year. Rising prices of edible oils and protein rich items pushed retail inflation to a six-month high of 6.3 per cent in May, breaching the comfort level of the Reserve Bank and thus rendering reduction in interest rates a difficult proposition in the near term. Led by petrol price, that has crossed the Rs 100-mark in many states, wholesale inflation too accelerated to a record 12.94 per cent in May. While crude oil has crossed $70 a barrel on account of rising prices of crude oil and manufactured goods due to spike in commodities, and the low base of last year due to the lockdown.
Common use products like hair oil, soaps and toothpaste will be charged with a single national sales tax or GST of 18 per cent instead of present 22-24 per cent
A V Rajwade wonders if the Modi sarkar is pursuing price stability at the cost of potential social instability in both rural and urban India.
India needs foreign exchange buffer reserves to insulate itself from exchange rate volatility as we have "no friends" for swap lines and Japan was the only country that helped during the taper tantrum in 2013, former RBI Governor Raghuram Rajan said on Tuesday. Participating in a virtual event organised by economic think tank NCAER, Rajan said during the taper tantrum in 2013, India asked for swap lines, and only country who helped was Japan. "We need this (foreign exchange) reserve buffer to insulate ourselves because we have no friends.
'The no-rate cut policy and preference to wait for the Budget and clarity on the fiscal front demonstrate RBI Governor Shaktikanta Das is maturing in his new role,' notes Tamal Bandyopadhyay.
There is nothing wrong with government and RBI having conflicting opinions.
'If the RBI now only prints Rs 100 in small denomination notes and the remaining amount is printed in Rs 500 and Rs 2,000 denominations, then by March-end the central bank can completely normalise the cash crunch situation.'
The Nikkei Markit India Manufacturing Purchasing Managers' Index (PMI) -- a gauge of manufacturing performance -- fell to 52.3, down from October's 22-month high of 54.4.
It is time for the three finance ministers of the 1990s to reveal the real hero, says T C A Srinavasa-Raghavan.
Fed is still concerned about weak export growth.
The Committee of Administrators (COA) on Saturday said the finance committee, which is currently headed by Jyotiraditya Scindia, will cease to exist once the new constitution of the Board of Control for Cricket in India is adopted.
Costlier vegetables and eggs pushed up retail inflation to a nearly six-and-a-half year high of 7.61 per cent in October, keeping it significantly above the comfort zone of the Reserve Bank.
While efforts are being mounted on a war footing to arrest its spread, COVID-19 will impact economic activity in India directly through domestic lockdown. The second-round effects, it said, would operate through a severe slowdown in global trade and growth.
The central bank tweaked the retail inflation range to 4.8-4.9 per cent in the first half of 2018-19, and 4.7 per cent in the second half.
Finance Minister Nirmala Sitharaman has said the recent interest rate hike by the Reserve Bank was not surprising for her but the timing was, asserting that the rising cost of funds will not impact the government's planned infrastructure investments. For the first time since August 2018, RBI had on May 4 delivered a blunt 40 basis points increase in key repo rate to 4.40 per cent, and also hiked the cash reserve ratio by 50 basis points to 4.5 per cent after an unscheduled meeting of the rate setting panel, citing increased inflation pressures following the Ukraine war and the resultant spike in crude oil prices. Retail inflation printed at 6.9 per cent in March and the April reading is forecast to top 7.7 per cent.
Technical Advisory Committee was for status quo in policy rate on little hope of government action.
The principal challenge for Rajan's successor is to work with the Bank Board Bureau and the finance ministry to complete these processes of banking reform.
A day after BRICS (Brazil, Russia, India, China and South Africa) nations agreed on a $100-billion foreign currency reserve pool to tackle the volatile foreign exchange markets, India on Friday said the pool would act as a buffer arrangement, adding it might not withdraw anything from this reserve.
The downward surprise in Q2 stemmed from a stronger-than-anticipated drag from gross fixed capital formation and marginal weakness in private final consumption expenditure. In Q3, projection errors emanated mainly from a steep unanticipated contraction in gross fixed capital formation, which was the deepest in the new series of GDP.
In a business friendly move, the Reserve Bank of India on Friday said that Real Time Gross Settlement System (RTGS), used for large value transactions, will be made available round-the-clock from December. In December 2019, the National Electronic Funds Transfer (NEFT) system was made available on a 24x7x365 basis. Currently, RTGS is available for customers from 7.00 am to 6.00 pm on all working days of a week, except second and fourth Saturdays of every month.
Relying on the private sector to undertake infrastructure investment may not be a realistic proposition.
.jpg)
Industry's demand for a reduction in the repo rate, currently 8 per cent, has gained momentum after wholesale and retail inflation eased in February.
Infrastructure and inflation targeting are expected to be top priorities for the new Reserve Bank of India governor, says A V Rajwade.
'People know if inflation is not within the tolerance band, then action will be taken so they do not expect inflation to rise above that.'
Analysts are expecting inflation to fall further in October and November on base effect. Inflation measured by consumer prices has been trending down for over four months, and came in at 6.7 per cent in September.
RBI recently cut repo by 0.25 percentage point, taking the rate to 7.25 per cent in three reductions since January.
A host of factors including the reform measures taken by the government and decline in global oil and commodity prices have led to lower inflation, the Finance Ministry said on Wednesday.
RBI wants periodic revision of the pensions for its retired employees.
Some say the MPC will raise the rate, while others are of the view that there is already de facto interest rate tightening through rising bond yields, which might prompt the central bank to go for a pause.
Finance minister Arun Jaitley has delivered a Arun Jaitley delivered a bold, far sighted budget
The 50-stock NSE barometer Nifty finished 14.75 points, or 0.14 per cent, down at 10,382.70 after shuttling between 10,340.65 and 10,393.15.
