MADAN SABNAVIS
Democrats' US midterm sweep may give India more room to negotiate a balanced trade deal with Trump
Democrats' takeover of both chambers of the US Congress could ease pressure on India in trade negotiations with the Trump administration, experts said. Greater Congressional scrutiny of tariffs may create opportunities for Indian exporters, although the existing 18% tariff is unlikely to change immediately and the bilateral trade agreement could face delays.
No water to sow, no respite at the grocery store: India's prolonged food inflation worry
Indian farmers face challenges in sowing winter crops amid dwindling water supplies from a weak monsoon. Amarsingh Gushinge's village experiences a significant rainfall deficit, impacting crop planting decisions. Food inflation could worsen as key staples see rising prices, aggravating the economic strain on households. The Reserve Bank of India may respond with interest rate hikes to combat rising inflationary pressures.
IIP growth eases to 4-month low in September as mining output contracts
September witnessed a decline in India's factory output growth, falling to 6.7%, the lowest rate observed in four months. The drop is largely linked to a high base effect and decreased mining activity. Despite this, manufacturing output surged by 7.6% compared to the previous year, while electricity generation also grew, spurred by robust demand even with insufficient rainfall. Economists anticipate GDP growth to surpass 7% for the July-September period.
Core output grows at series high of 7.9% in Sept
India's core sector output growth for September recorded a remarkable 7.9%, driven largely by expansion in coal and electricity. Notably, refinery products and iron ore also contributed to this growth, supported by a favorable base effect. Coal production saw a sharp rebound with a growth rate of 10.7% following previous negative trends. Electricity generation growth declined slightly, impacted by heatwave conditions in the country.
Rupee rebounds nearly 1% after RBI moves to curb speculative trades
The rupee rebounded nearly 1% to 95.77 per dollar on Monday after the RBI announced measures to curb speculative currency trades. A special window for state-owned oil marketing companies eased spot-market pressure, though dollar buying by importers and corporates capped gains. Elevated crude prices and global uncertainties continue to weigh on the currency.
Pressure on rupee may continue after temporary gains on RBI actions, say economists
The Reserve Bank of India has implemented emergency measures to stabilize the rupee, which is facing strong global pressure. Analysts indicate that the rupee may continue to decline despite these efforts. The rupee's drop is influenced by rising US bond yields and significant foreign investment outflows. Measures such as transaction limits and cash reserve requirements are aimed at curbing speculation.
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RBI says it will ensure 'undervalued' Rupee finds its correct level
The Reserve Bank of India has stated its intent to stabilize the undervalued rupee, which reached a five-month low. Despite raising the policy rate for the first time since February 2023, the rupee has fallen due to foreign capital outflows. According to economists, the stronger dollar index contributes to the rupee's pressure in the market. Interventions by the central bank included dollar-rupee swaps to manage liquidity effectively.
India may average 7.2% growth this fiscal despite H2 slowdown, potential seen at 8%, says economist
India's economic growth is expected to slow down below 7 percent in the upcoming quarters. Despite this moderation, the overall growth for the year may average around 7.2 percent. Economist Madan Sabnavis indicates potential for long-term growth reaching 8 percent in the coming years. Global uncertainties and local consumption impacts are significant factors influencing this outlook.
Rupee headed to 100? How much the psychological red line matters
India's rupee has slipped past ₹96 as high US Treasury yields, elevated oil prices and foreign portfolio outflows strengthen the dollar. The IMF says India can allow the exchange rate to act as a shock absorber, while the RBI weighs intervention against reserves, inflation and external risks. Experts debate whether gradual depreciation could improve competitiveness without triggering imported inflation.
RBI likely to hike repo rate by 25 bps to 5.50% in October policy: ET Poll
On Monday, the Reserve Bank of India's Monetary Policy Committee will hold important meetings. Analysts are anticipating a 25 basis points increase in the key interest rate, raising it to 5.50%. The surge in inflation is attributed to elevated crude oil costs and subpar agricultural production. Many economists advocate for a rate hike as a crucial measure to tackle ongoing inflation issues, with outcomes to be revealed on October 7.
Rupee's likely to slip despite RBI push for stability
The rupee could decline to 96-97 per dollar by the end of FY27 due to several factors. Persistent outflows from Indian financial assets and elevated crude oil prices create additional pressure. Although the Reserve Bank of India argues for potential stabilization, economists remain skeptical of this outlook. Recent foreign exchange actions indicate ongoing depreciation pressures on the currency.
August core sector growth hits 3-month low as energy sectors lose steam
India's core sector output growth slowed to 4.8 percent in August. This easing was due to contractions in energy sectors and an unfavorable base. Fertilizer production declined significantly for the sixth consecutive month. However, electricity and cement sectors showed strong growth during this period. Cumulative core sector growth for April-August rose to 4.3 percent.
A dozen ingredients show India's mounting food inflation risk
India’s everyday thali is getting costlier as weak monsoon rains, the Iran and Ukraine wars and rising demand for crops used in biofuels push up food prices. Onions are nearly 50% more expensive than a year ago and ginger has surged over 70%, adding pressure on households just as the festive season begins.
Gaining ground: Household manufacturing grows 4x faster than corporates
Household manufacturing in India is growing nearly four times faster than corporate entities. This sector's gross value added shows a substantial compound annual growth rate. Corporate manufacturing's share of total manufacturing GVA has seen a decrease. The expansion is driven by smaller businesses and better informal sector data. Textiles, apparel, and metal products lead household manufacturing growth.
Centre sees no cost pain for RBI on dollar deluge
The Reserve Bank of India anticipates minimal costs from significant forex inflows. High interest rates on US treasuries are expected to offset hedging expenses. These record inflows will also reduce currency intervention costs for the central bank. Economists suggest hedging costs could reach thirty-six thousand crore rupees. The RBI's balance sheet growth may impact future surplus transfers to the government.
Bank credit, deposits decline in fortnight ended August 15: RBI data
Banking sector saw deposits withdrawn and credit outstanding decrease in the fortnight. Banks are not renewing bulk deposits, opting for foreign currency funds instead. This shift slowed year-on-year deposit growth to 14.7 percent. Outstanding bank deposits stood lower at Rs 269.31 lakh crore.
Should state development loans go with differential rates?
The states which end up borrowing at the lowest weighted average cost are those which have borrowed more when yields were down and not because the market favoured them.
Only 4 major nations have higher bad loans than India
The only nations with a higher NPA than India are Portugal, Italy, Ireland & Greece. Even among the troubled PIIGS, Spain's NPA is less compared to India.
Next year, expect more flexibility on fiscal deficit target: Madan Sabnavis, CARE Ratings
"This government is committed to the FRBM part and therefore I think 3.5% fiscal deficit target this year will be maintained."
Give more weightage to what RBI, IMD say about monsoon and not the Govt: Madan Sabnavis, CARE Ratings
'The government would take whatever action is required. But we should give more weightage to what the RBI and IMD are saying. '
RBI likely to wait for more data points before cutting rates: Madan Sabnavis, CARE Ratings
"In fact, I would not have been surprised in case the RBI deferred this policy until the numbers for March came out."
Expect Govt to target 8% GDP growth for next year: Madan Sabnavis, CARE Ratings
"In case you are looking at a number of more than 8%, it means that your inflation numbers would be substantially lower."
Expect govt to meet fiscal deficit target of 3.6%: Madan Sabnavis, CARE Ratings
Capital formation has still been falling in the new calculations, but we get the sense that most of these higher numbers in GDP growth is more of the inclusion of new sectors.
See GDP growth closer to 5% in Q2: Madan Sabnavis, CARE Ratings
Our own analysis shows it will be closer to 5% because we already have certain information on the way which the industry has progressed.
Growth recovery is going to be slow and gradual: Madan Sabnavis, CARE Ratings
We have been saying that there was a policy paralysis last year when we had the earlier government, and the new government is cleaning up things.
Don’t expect any change in sovereign rating of India: Madan Sabnavis, CARE Ratings
'The whole regime of easy money will come to an end very soon, though it is likely that Europe will go ahead with quantitative easing,' says Madan Sabnavis.
Don’t expect RBI to cut rates until rupee stabilizes: Madan Sabnavis, CARE Ratings
"The global sentiment is something which we will have to live with. As of now it appears to be stabilized. So I do not think the QE issue is affecting the rupee that much."
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