"However, the cut in the CRR by 50 bps would help support growth, after the sharp downward revision in the forecast for FY2025."
The increased capex spending will see their debt-level in relation to their gross domestic product rising to 30 per cent from 28.9 per cent in FY23, a report by Icra Ratings said.
Aditi Nayar, the chief economist and head of research at Icra Ratings, said the drawdown is a sharp 24 per cent more than indicated in the quarterly borrowing calendar
A revenue deficit of 3.5 percent of GDP and a fiscal deficit of around 5 percent of GDP for the Government of India may allow enough space for prioritising health expenditure, vaccine rollout as well as capital spending.
With liquidity remaining in substantial surplus, we expect the banking system to rapidly transmit additional rate cuts, thereby supporting the case for front-loading of policy easing
There is a high likelihood of a 25 bps cut in the repo rate.
CII Director General Chandrajit Banerjee said the "demonetisation move will act as a temporary setback to growth in the coming quarter", adding that the numbers point to continuing dependence on consumption and public spending to revive demand while investments are showing a declining trend compared with last year.
India Nikkei's October manufacturing Purchasing Managers' Index (PMI) came in at 54.4. A considerable rise compared to September's 52.1. The index is at its highest level since Demcember 2014.
Monetary Policy Committee may choose to wait for confirmation of the dampening effects of the higher output on prices after the harvest reaches the market, before embarking on the rate cut.
"In Moody's view, over time, the multi-pronged but step-wise approach to reform will foster a stable macroeconomic environment. In particular, the cementing of the monetary policy framework with the objective of maintaining inflation at moderate levels is credit positive.
"WPI inflation is expected to print between 4-4.5 percent in the remainder of 2016, whereas CPI inflation would range within 4-5 percent in the same months, closing the wedge between the two metrices," Senior Economist at ICRA Aditi Nayar said.
Speaking to CNBC-TV18, Arundhati Bhattacharya, Chairman, SBI, said it it won‘t be a big negative, if there are no rate cuts. But she did say that a rate cut brings in more confidence. A whole of experts, and industry experts also spoke on the RBI's latest report.
It said the central bank is expected to keep rates unchanged for now as CPI inflation at around 5.8 percent in June is close to upper end of RBI's target of 4 percent (+/- 2 percent).
Central transfers to states fell from 6.6 percent of gross domestic product in FY15 to 6.3 percent in FY16 — which is surprising especially after the FCC increased the states' share of central taxes
ICRA expects headline CPI inflation to ease further in March 2016, led by both food and core inflation, and print close to the RBI‘s target of 5.0% for March 2017. This would support the case for a 25 bps cut in the Repo rate.
“We were hoping that the November IIP numbers wouldn‘t go into the contraction zone, that they would remain low but positive,†says Aditi Nayar, Senior Economist, ICRA
The proposed goods and services tax (GST), India's biggest revenue shake-up since independence in 1947, seeks to replace a slew of federal and state levies, transforming the nation of 1.2 billion people into a customs union
The government's Mid Year Economic Review, released last week, had said the government should consider revising fiscal year 2017's fiscal deficit target from 3.5 percent currently -- with media reports pegging the new target at 3.7 or 3.9 percent.
Relative to the previous quarter, Aditi Nayar, Senior Economist, ICRA, expects to see an uptick in industry, mild uptick in services and agriculture and allied sectors will likely see softening
Aditi Nayar, senior economist at ICRA, says, high frequency indicators such as auto sales numbers have been mixed. She says coal and electricity, which contribute 15% to IIP, will show a muted trend
The July Wholesale Price Index (WPI) contracted for ninth straight month to -4.05 percent against -2.4% in June on account of easing commodity and food prices.
"In ICRA's view, the better-than-expected monsoon and sowing turnout in June 2015 have increased the probability of a repo rate cut during the third quarter of 2015-16, as long as external developments do not result in excessive forex volatility," ICRA said in a statement.
The annual rate of inflation, based on monthly WPI, stood at -2.36 percent (provisional) for the month of May, 2015 (over May, 2014) as compared to -2.65 percent (provisional) for the previous month and 6.18 percent during the corresponding month of the previous year.
Corporate earnings are giving a picture in terms of nominal prices, says Aditi Nayar, senior economist at ICRA on GDP. She believes real growth could still be higher than what corporate earnings is pointing at.
Given the weakness in industrial output and downtrend in inflation, expectations of a rate cut by the RBI at its June meet have risen.