It would be a difficult task for the Indian economy to reach the $5-trillion mark a year before the International Monetary Fund (IMF) projection of 2026-27. Pankaj Chaudhary, minister of state for finance, said in the Rajya Sabha on Tuesday that the government is taking steps to make the country a $5-trillion economy at a date earlier than the IMF's projection. In that context, it would not be difficult to meet the projection in the third quarter of FY27.
The Centre is staring at a combined shortfall of up to Rs 1 trillion in excise and Customs revenues in the current financial year (FY23) compared to the Budget estimates (BE), mainly because of duty cuts on edible oil and petroleum products. The government set a target of Rs 3.35 trillion for excise and Rs 2.13 trillion for Customs mop-up for FY23 while presenting the Budget in February. "As excise duty collection is mainly driven by diesel volumes, we might see a clear gap in the level budgeted for FY23, following the reduction in cesses on petrol and diesel in May. We are expecting somewhere between Rs 80,000 crore and Rs 1 trillion dip in excise and customs duty collections," a senior government official told Business Standard.
Experts attribute the lower target to increased allocation under the credit guarantee scheme for small businesses. Out of the Rs 3.21 trillion worth loans sanctioned under the Pradhan Mantri Mudra Yojana (PMMY) in the last financial year, Rs 3.12 trillion were disbursed to entrepreneurs, according to official data.
Since January 2021, the inflation rate in health has stood in the range of 6.08-8.44 per cent.
However, it may still not change its stance on the policy rate as inflationary pressures are coming from high commodity prices.
According to Ajai Sahai, director-general and CEO of Federation of Indian Export Organisations, rising cases are a cause for concern as it adds to the uncertainty and may impact exports.
This may come as a surprise to many. Retail price inflation in petrol was the lowest at 10.21 per cent in March since November 2020. In diesel, it scraped the bottom of the barrel at 5.19 per cent in the last month of 2021-22 since February 2020. Even liquefied petroleum gas (LPG) was at a nine-month low of 9.97 per cent in the month.
After the government sought Parliament's nod for a second batch of supplementary demand for grants that will cause a hit of Rs 2.99 trillion to the exchequer, doubts suddenly arose about the government's ability to meet the Budget projections of reining in its fiscal deficit at 6.8 per cent of gross domestic product (GDP), or Rs 15.06 trillion, for the current financial year. Till now, many were of the opinion that the government would succeed in checking the deficit at a much lower figure than what was given in the Budget Estimates (BE). The government had sought Parliament's approval to spend Rs 3.74 trillion extra, but Rs 74,517.01 crore will be matched by equal savings on other heads.
The sudden stop in economic activity led to a sharp decline in employment-intensive sectors like construction, manufacturing and trade, hotels, transport etc.
Their implementation is expected to create investment owing to improving ease of doing business as well as initiating pro-worker measures.
Investors and companies should brace for higher commodity prices over the next few weeks in the backdrop of Russian troops attacking Ukraine on Thursday. Meanwhile, US President Joe Biden threatened new sanctions against Russia for an act of aggression against Ukraine. All this, analysts believe, can push prices of key commodities such as crude oil, ammonia, urea, potash, and phosphates higher.
However, the growth, driven largely by a bumper rabi harvest and facilitated by relaxation in lockdown, may not have resulted in a big rise in income for a section of farmers.
India's exports are unlikely to get an immediate boost from a depreciating rupee, which touched an all-time low on Monday, driven by rising commodity prices. The rupee fell to 76.97 against the dollar earlier in the day, settling 1.05 per cent weaker than the previous close. Oil prices soared to their highest since 2008 on Monday at $139 per barrel, after the US and European allies explored a Russian oil import ban, while delays in the potential return of Iranian crude oil to global markets increased supply fears.
Revenue from divestment has fetched Rs 40,000-50,000 crore against target of Rs 2.10 trillion.
Gross value added in agriculture and allied activities clocked a healthy growth rate of 4.5 per cent at constant prices in the second quarter of FY22, up from 3 per cent during the same period last fiscal year and 3.5 per cent in Q2 of 2019-20. In the first quarter of FY22, gross value added in the sector was also 4.5 per cent. Growth in current prices was also a healthy 7.9 per cent in July-September 2021-22, up from 7.3 per cent in the same quarter last fiscal year. It was slightly less than the 8.7 per cent of the second quarter of 2019-20.
Categories such as washing machines, refrigerators and television sets have seen sales growth of around 8-10 per cent in August compared to last year, industry sources said, with September also reporting a similar growth trajectory.
Other countries with a large number of cases including Brazil, Russia, Spain and the United States of America, all have more people heading to work.
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 biggest headwind to the consumption story in FY23 is a sharp decline in government subsidies on food, fertiliser and fuel, and overall decline in revenue expenditure net of interest payments. This, analysts say, will adversely impact purchasing power of households at the lower end of the income pyramid, translating into lower spending on consumer goods and services.
The reserves rose to $501.70 billion helped by a whopping rise in foreign currency assets, the latest data from the Reserve Bank of India.
The economy has shown sharp resilience in the past and has also bounced back in good time. We could hence expect a similar trajectory next year, observes Madan Sabnavis, chief economist, CARE Ratings.
Emerging markets such as India have always run higher inflation rates than developed economies such as the US and countries of Western Europe. But for the first time in the past 30 years, the US reported a higher consumer price inflation (CPI) rate than India in five consecutive months. The US reported a CPI rate of 7.5 per cent in January 2022 against 6.01 per cent in India and analysts expect the trend to continue for at least a few months more
Slight recovery in growth is expected only in July-September.
Monsoon in August was almost 24 per cent below normal, which was the sixth driest August since 1901. It came on the back of a 7-per cent monsoon shortfall in July.
If the government cuts wasteful expenditure as it is trying now, the deficit would at most fall to 8 per cent, not less than that.
Direct economic stimulus measures such as tax cuts for individuals and industry would have helped to prop up the Indian economy which was hit hard by the lockdowns across several states in India, say economists and corporate leaders. While the measures announced on Monday are focussed more on the supply side, these steps would take a lot of time to move the needle for the economy.
The rates of price rise in many services used by the common man, including hospital and nursing, cook, domestic help and bus (fare), among others, have also touched double digits during the last four years, putting a burden on disposable income.
If imputed inflation for April and May is used, then you have inflation of over 6 per cent for two consecutive quarters, which is a worrying signal for the RBI.
The return of private investment now struggles with lack of funds and election-driven uncertainty.
'The effect will be seen two-three quarters down the line.'
Historically, there has been no correlation between growth in bank credit to industry and lower benchmark interest rate
Infra segment, refinery product impacted the most, even as contraction narrows in latest month.
For the first eight months of the current financial year, the figure stood at Rs 7.17 trillion.
However, the hike in salary for government officials may take some time as the Centre had earlier this year decided to put a freeze on any hike in the DA of its employees till July, 2021, owing to the Covid-19 pandemic.
Completed projects saw an improvement of 29.2 per cent over the June quarter, which is valued at Rs 0.31 trillion.
Cascading effect of rising raw materials will result in inflation, high rates, slow capex
On the basis of Budget projections, the Centre needs Rs 7.3 trillion revenue during December-March and its expenditure must be limited to Rs 6.7 trillion.
Most analysts expect the note ban to sharply hit GVA growth in Q3 and Q4, and the central bank's stance is being called into question.
The prospect of India Post turning into a bank sounds like a capital idea, especially since we are talking about inclusive banking.
As the growth figures relate to pre-Covid lockdown period it does not reflect the real picture of distress which unfolded from April onwards in the sector, when acute supply disruption led to sharp drop in prices of many commodities largely perishables impacting farmers.
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