RBI keeps interest rates unchanged on inflation risks
The Dollar Business Bureau The Reserve Bank of India (RBI), in its sixth bimonthly Monetary Policy Committee meeting, on Wednesday kept the repo rate unchanged at 6%, while hinting on tight monetary conditions due to rising inflation risks. The Bank also increased the Consumer Price Index (CPI) inflation forecast for March-end to 5.1% and estimated that inflation would be in the range of 5.1-5.6% in the first six months of the next fiscal. “On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6%,” RBI said in a statement. “Consequently, the reverse repo rate under the LAF remains at 5.75%, and ...
Direct Port Delivery: To whose advantage?
By Abin Daya The Government is working to improve the ‘ease of doing business’ ranking of the country, and one of the areas of focus is the time it takes for manufacturers to get their imported raw materials and components, out of the port and into their factories. The numbers are not very encouraging, and it currently takes about 9-10 days to get a container out of the port and on its way to the manufacturer. With a view to improving this, the Direct Port Delivery arrangement was started in 2016. How is it faring? Please read on in this week’s update. The most important story of this week, definitely, is the 25 bps cut that the Monetary Policy Committee permitted on ...
Direct Port Delivery: To whose advantage?
By Abin Daya The Government is working to improve the ‘ease of doing business’ ranking of the country, and one of the areas of focus is the time it takes for manufacturers to get their imported raw materials and components, out of the port and into their factories. The numbers are not very encouraging, and it currently takes about 9-10 days to get a container out of the port and on its way to the manufacturer. With a view to improving this, the Direct Port Delivery arrangement was started in 2016. How is it faring? Please read on in this week’s update. The most important story of this week, definitely, is the 25 bps cut that the Monetary Policy Committee permitted on ...
The week that was: oil, sugar and core sector growth
By Abin Daya It is very rare that you will find a month in which all the 8 core sector industries have had positive growth. No, it did not happen in Feb 2017; but it happened a year back – in Feb 2016! Before that it happened in 2010 – that too, three months in a row! In the case of Feb 2016, what made the month even more special was that 4 out of 8 core sector industries grew in double digits! Understandably, when something like that happens, you expect a significantly high rate of growth for the sector. Core sector grew at 9.4% in Feb 2016. Compare that with the core sector performance a year later, in Feb 2017. Such a ...
Despite fall, GDP will bounce back sharply: RBI Governor
PTI Reserve Bank of India (RBI) Governor Urjit Patel on Friday said India's economic growth will make a "sharp V" recovery following the recall of old Rs.500 and 1,000 currency notes. Patel also made a strong case for continuing with globalisation even in the face of a potential shift to trade protectionism under US President Donald Trump as India has benefited from open trade. "Almost everyone agrees that the impact is going to be a sharp 'V', that we would have a downgrade of growth for a short period of time," he told CNBC-TV18 in an interview. "However, the remonetisation has happened at a fast pace and that was part of the plan." RBI last week lowered the economic growth for ...
India's services sector affected due to demonetisation
The Dollar Business Bureau Demonetisation has put an end to the 16-month expansion of India's services activity with the sector witnessing a decline in the month of November. In totality, the seasonally adjusted Nikkei India Composite PMI Output Index has decreased from October’s 45-month high of 55.4 to 49.1 in November, reflecting a slight contraction in private sector activity. A reading above 50 on the index reflects economic expansion whereas a figure below that indicates contraction. According to Pollyanna De Lima, an Economist at Markit and author of the report, the ban of Rs. 500 and Rs. 1000 notes have heavily impacted the services sector with cash shortages leading to lesser new business intakes. This has ultimately led to a fall in activity and ended a ...
RBI may cut rates sooner than expected: DBS
The Dollar Business Bureau Though rupee volatility and global uncertainties suggest that first three-month period of 2017 is a favourable time to ease rates, Reserve Bank of India (RBI) may cut rates soon, most probably in December in order to support the growth and tap favourable outlook of inflation, according to a report by DBS. After the demonetisation move by the Indian government, the dampening effect on economic activities is clear, mainly on supply chain, consumption and the businesses dependent on cash transactions and inflation, in the current and next quarter, said the global financial services major in the report. “On policy, while external uncertainties and rupee volatility suggest first quarter of 2017 is a better timeline to ease rates, the central bank might prefer to bring forward the rate ...
Retail inflation at 4.31%, a 13-month low
The Dollar Business Bureau Retail inflation dropped sharply for the second consecutive month in September, reaching a 13-month low endorsing the Reserve Bank of India’s (RBI) decision for an interest rate cut in anticipation for such a development. The data issued by the Central Statistics Office on Thursday showed the combined consumer inflation rate at 4.31 percent for the month of September compared to 5.05 percent in August and 6.07 percent in July. The drop was because of a sharp decline in food inflation to 3.88 percent in September as against 5.91 percent in August. The latest data raises hopes of a further cut in rates as the inflation outlook could be benign for around six months and there is a good chance ...
