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
BUSINESS
Mixed macro releases portend monetary policy pause
Inflation cooled to multi-month lows but the industrial growth was tepid and well below expectations, and merchandise exports contracted as global demand fell
BUSINESS
Pivot to rate cuts appears distant as sub-par monsoon may push prices higher
The potential development of El Nino conditions in the second half of the monsoon season could pose a key upside risk to the food inflation trajectory over the next few quarters
BUSINESS
State capex falls short on sluggish execution. But ambitions soar
State capex spending and their offtake under the GoI scheme were tepid through the first half of FY2023. Initially, concerns regarding the fiscal situation after the planned end to the GST compensation period of five years on June 30, 2022, may have restrained the states’ capital spending
BUSINESS
GDP Data: Glass half full
GDP growth relative to the pre-COVID level firmed up quite considerably to 11.6 percent in Q3 FY2023 from 9.4 percent in Q2 FY2023. We are taking this as a signal of an improvement in the underlying momentum of growth, which nevertheless remains quite uneven
BUSINESS
MPC Meeting: Policy decision to be a close call
The expectations of softer headline inflation prints and slower growth in FY2024 warrant a pause in the rate hikes at the current juncture
BUSINESS
MPC | RBI adopts a neutral tone amid clear shift to data dependency
A likely drop in inflation readings to below 6 percent after November-December 2022 suggests that additional repo hikes from the MPC are likely to be quite limited, notwithstanding the expected continued tightening by the US Federal Reserve and other major central banks
BUSINESS
GDP | Services power double-digit expansion
The double-digit rise in the GVA in Q1 FY2023 was led by a rebound in services activity on a low base, with two of the three sub-sectors, displaying a resounding YoY expansion in excess of 25 percent
BUSINESS
RBI measures will have to be sizeable to keep yields in check
The repo rate is likely to be hiked by another 60 basis points (bps) over the next two policy reviews, which will be rapidly transmitted by Banks to their lending and deposit rates, amidst the compression in the systemic liquidity surplus. However, the measures that are actually brought forth by the central bank to ensure the orderly completion of the Government borrowing programme, and their magnitude, would determine where bond yields settle in the coming months
BUSINESS
GDP | Growth slows, but not as much as feared
The government’s final consumption expenditure and gross fixed capital formation reported an encouraging pickup in growth to 4.8 percent and 5.1 percent, respectively, in Q4 FY2022, from the tepid 3 percent and 2.1 percent, respectively, in the previous quarter
BUSINESS
Monetary Policy | Imminent policy normalisation not telegraphed
The direction that yields will chart over the next six months is clearly upwards, with the 10-year paper likely to cross 7 percent in April 2022 once next year’s borrowing programme commences
BUSINESS
Highlight of Budget 2022 is focus on capex
The budgeted numbers for receipts on account of disinvestment at Rs 650 billion for FY2023, appear achievable with the possibility of some spill over from the stake sale in LIC
BUSINESS
The fiscal deficit target should be realistic, says Aditi Nayar, Principal Economist, ICRA
BUSINESS
Budget 2021 expectations | Government should avoid sharp fiscal tightening
For the GoI, a revenue deficit of 3.5 percent of GDP and a fiscal deficit of around 5 percent of GDP in FY2022 may allow enough space for prioritising health expenditure, vaccine rollout as well as capital spending.
