BUSINESS
Growth could taper off after large Q1 upside
India's Q1 FY2026 GDP growth exceeded expectations at 7.8%, driven by manufacturing and services, but uncertainties around tariffs, weak mining output, and delayed private investment suggest slower growth ahead
BUSINESS
Extended pause in RBI’s policy rate has likely started
With unchanged rates in this meeting, an extended pause is now underway. By the time the data starts showing a slowdown in quarterly GDP growth prints, inflation will likely have normalised to above 4%. This would surely constrain further monetary easing, going ahead
BUSINESS
MPC meeting: Final cut or start of an extended pause?
The MPC will likely moderate its baseline forecast for GDP below the extant 6.5 percent, further supporting the case for a rate cut
ENVIRONMENT
US exit from Paris Agreement begins to bite
The US alone accounts for over 50 percent of the pledged funding to the Green Climate Fund, which is the world’s largest climate fund. Other stakeholders now face a pivotal moment. They have to find a way to offset the exit of the most influential country in the funding mechanism
BUSINESS
GDP growth set to dip in Q1 FY2026
High frequency indicators show that economic momentum in the April-June quarter may have decelerated. The combined negative impact of tariff-related issues and early onset of monsoon could lead to GDP growth for the quarter slowing down to a level below 6.5%
BUSINESS
Pace of Q4 growth surprises, but RBI will stick to monetary easing
Net indirect taxes have had an unforeseen level of impact on GDP, pushing it higher than market expectation. Among other factors giving it a boost were high government investment spending and a contraction in imports. Given the level of uncertainty arising from global factors, RBI is unlikely to let the GDP trend arrest the ongoing monetary loosening cycle.
BUSINESS
States are beneficiaries of softening interest rates
With 50 bps of rate cuts underway, we now expect another 50 bps of monetary easing over the next two-three policy reviews. With this, the WAC of SGS could come down to 6.3-6.5% over the course of the year, maintaining a spread in a range of 30-50 bps over G-sec, over the course of the year
BUSINESS
September-December GDP growth rate offers relief, but falls short of expectation
Statistics ministry expects GDP to expand by 7.6% in the January-March quarter which appears unlikely despite episodic consumption boost. It’s now reasonable to expect another 25-50 basis point reduction in repo rate by RBI
BUSINESS
A snapshot of the Production Linked Incentive scheme
PLI schemes are collectively expected to utilise 16% of the outlay by the end of FY26, even though some schemes such as those for drones and mobile phones have utilised a higher proportion. To improve utilisation rate, the government could consider additional incentives in some sectors.
BUSINESS
New Budget to focus on fiscal prudence and growth
With high global uncertainty and moderated domestic growth, the Government of India is expected to continue fiscal consolidation while focusing on capital expenditure to boost infrastructure. Projections suggest a modest fiscal deficit reduction, tax revenue growth, and strategic debt management
BUSINESS
MPC balances prudence and practicality amid divergent growth inflation dynamics
If no new risks emerge that derail the moderation in inflation to the projected 4.0% by Q2 FY2026, a repo cut in February 2025 could very well be on the table.
BUSINESS
Rural economic recovery may buoy overall consumption
Private consumption expenditure may show only modest growth when the July-September GDP data is released this week. However, healthy kharif output and a positive outlook for the rabi season will boost rural demand. This, in turn, should bring down food inflation and free up urban household budgets for more discretionary consumption
BUSINESS
Monetary Policy | Rate cut in December 2024 is not a done deal
The change in stance to neutral opens the door for a potential rate cut in the December 2024 meeting. If two macro indicators play a supportive role, they could tilt the balance in favour of a rate cut
BUSINESS
GDP set for a fall in Q1 which may nudge RBI’s MPC to look at monetary easing
GDP growth in the April-June quarter likely decelerated to 6 percent, a six-quarter low. It’s most likely because of temporary factors and the second half of the fiscal will see a rebound to over 7 percent
BUSINESS
GDP Data: High growth to delay monetary easing
The headline growth numbers look extremely encouraging. In this piece we delve into why the GDP growth slowed down in Q4 FY2024. It is likely to delay monetary easing
BUSINESS
MPC Meet: RBI to maintain status quo with a hint of caution
As this fiscal year's first MPC begins, it looks like the Reserve Bank of India is very likely to maintain the status quo on interest rates along with a dose of caution about the inflationary as well as geo-political outlook
BUSINESS
Q3 FY24 GDP: Is it an acceleration or slowdown in growth?
India's GVA growth slowed in Q3 FY2024 to 6.5 percent from a revised 8.2 percent in Q1 FY2024 and 7.7 percent in Q2 FY2024. However, GDP growth rose to a robust 8.4 percent in Q3 FY2024 from an upward revised 8.2 percent in Q1 FY2024 and 8.1 percent in Q2 FY2024
BUSINESS
RBI policy bullish on growth, cautious on new inflation risks
Overall, the MPC’s bullish expectations around the growth outlook and its forecast of CPI inflation to ease, albeit remaining above the 4 percent target, reinforces our view of a likely shallow rate cut cycle. We foresee cumulative rate cuts of 50-75 bps, commencing in the August 2024 meeting, and a stance change in the preceding review, after there is some visibility on the monsoon turnout
BUSINESS
GDP upside may not sustain
Notwithstanding the higher-than-expected GDP print for Q2 FY2024, we are apprehensive that growth will ease to around 5 percent in H2 FY2024. The base effect will continue to optically moderate growth in some sectors
BUSINESS
State Capex: Glass one-third full
To meet the capex target for FY2024, the capital outlay and net lending of the 21 states would have to expand by an estimated 28 percent YoY, which appears challenging in light of the Assembly elections in some states and the parliamentary elections in 2024
BUSINESS
GDP components likely to have fared better in Q1 FY24 than estimated
PFCE and GFCF are likely to have fared better than what is suggested by their moderately healthy initial YoY growth estimates of 6.0 percent and 8.0 percent, respectively, for the quarter
BUSINESS
Q1 GDP: Mildly disappointing growth print
Looking ahead, we are certain that the YoY growth figures are going to lose steam as the year progresses, on account of a below-normal monsoon outturn, narrowing differentials with year-ago commodity prices, and a possible slowdown in momentum of government capex as we approach the Parliamentary elections
BUSINESS
RBI likely to delay rate cuts to Q2 of FY2025
The tone of the MPC document was more hawkish than the June 2023 policy statement, given the rising uncertainties being posed by both food and crude oil prices, and a particularly erratic monsoon distribution
BUSINESS
Predictability in monthly tax devolution could benefit state finances
Clarity on devolution will help the states to better plan their capex spending and also better assess their borrowing needs for the last two quarters of this fiscal
