The rate of policy hikes is likely to be slower than what was seen in recent months, says Bajoria
Inflation is expected to moderate in FY23, although rising international commodity prices – especially crude oil – remain a source of key upside risk, Barclays India's Rahul Bajoria said.
The central bank may hike the repo rate only by the first quarter of next fiscal (April-June 2022) and continue to maintain the accommodative stance in the interim.
Chief India Economist of Barclays projects a fiscal deficit of 7-8 percent
India's central bank policy review is expected to yield little in the way of action on Tuesday, but its statement will be pored over for clues as to whether there is a chance of another interest rate cut this year
Decline in oil prices is the biggest positive for Indian economy which will allow government spending in the days to come. The biggest beneficiary of the spending has to be infra sector, suggests Rahul Bajoria of Barclays.
India's government and businesses are pushing for an interest rate cut next week even though data on Friday may show output is expanding faster than China's, in the latest sign of concerns that the figures are masking weaknesses in the economy.
Easing inflation will also make life easier for a Reserve Bank of India (RBI) that has an arduous task of pulling the economy out of a stagflation-like situation. Economic growth has been stuck below 5 percent for the past four quarters but prices have risen at a fast clip.
There has also been outrage at the treatment of Khobragade, with the Indian media describing the incident as the worst crisis since Asia's third largest economy carried out a nuclear test in 1998.
A 2% exports growth expectation has raised some worries. StanChart plans to watch out for the export performance closely, while the news on imports looks more promising
For Gracie Salis, a 52-year-old Indian national living in the country`s financial capital Mumbai, the surge in fresh food prices and higher transportation costs stemming from a rise in fuel costs, has forced her to scale back on discretionary purchases.
According to economists Siddhartha Sanyal and Rahul Bajoria, weakness in usually resilient segments like consumption and domestic trade suggests continued sluggishness in overall economic activity.
In an interview to CNBC-TV18, Sajjid Chinoy, Asia economics, JPMorgan says it will be very tricky for the central bank to go ahead with any rate cuts for FY13 and doesnt see the RBI having any headroom to cut further.
Powered by expansion in the services sector, the government has pegged India’s economic growth for the financial year 2011 at 8.6% versus the 8% recorded last year.