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Tuesday, March 19, 2024
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MacroSutra

India’s resilient economy faces risks from Red Sea, higher US inflation & patchy recovery in China

The domestic economy continues to show resilience as reflected in the robust growth projections for the coming year. However, global challenges could pose headwinds...

Uncertainty over food & oil prices — why India, like other countries, held its policy rates steady

Most global central banks acknowledge easing in inflation but note it remains above target. Recent geopolitical disruptions also pose upside risk to inflation, a view held by RBI as well.

Interim budget continues govt’s focus on capex, allocates more for MNREGA to ease rural distress

Capital expenditure for next FY is achievable but could be challenging given this year's under-achievement. Moreover, rise of interest payments doesn't bode well for quality of expenditure.

What to expect from interim budget? Big tax breaks unlikely, welfare schemes could see boost

The interim budget, to be presented on 1 February, is likely to maintain focus on fiscal consolidation along with a thrust on capital expenditure, although at a moderated pace. 

High debt burdens and dependence on Centre — the unique fiscal constraints of northeastern states

Northeastern states feature among the most indebted. Many of these states also have high levels of committed expenditure, which means they have less left over for capital creation.

Manufacturing, investment drive India’s FY24 growth estimate, but consumption needs to rebound

Govt's first advance estimates peg India’s nominal GDP growth at 8.9%, lowest since Covid-hit 2020-21 & lower than 10.5% assumed at start of year. This could put pressure on fiscal deficit target.

Better asset quality & improved capital position, but India’s finance sector still needs vigil in 2024

RBI's Financial Stability Report & Report on Trend & Progress of Banking in India show growing inter-connectedness between banks and non-bank financial companies could pose systemic risk concerns.

Global slump, resilience of corporates, easing inflation — what will shape India’s economy in 2024

Apart from these factors, in the new year, food prices will continue to be vulnerable to global uncertainties & weather events, while household borrowings from banks will remain steady.

IMF’s assertion that RBI over-regulated rupee is weak, but advice on better fiscal targets is useful

Govt, RBI term IMF’s exchange rate re-classification as arbitrary. They also disagree with its assertion that India’s general govt debt-GDP ratio could exceed 100% of GDP in medium term.

Food inflation getting more persistent & widespread and, unfortunately, showing no signs of easing

RBI has retained its inflation projection at 5.4% for the current year. Uncertainties in food prices and volatility in global crude oil prices continue to keep 4% target out of reach.

On Camera

Move over Ed Sheeran, Rihanna. The only pop star India wants more of is Diljit Dosanjh

Sheeran’s concert in Mumbai on Saturday was a roaring success. But the most viral moment was when Dosanjh joined him, and brought the house down.

Complaints to RBI ombudsman up 68% in FY23, banks biggest cause for customer grievances

Data shows large public sector banks received highest number of complaints in absolute terms, but fared better than several private banks when looked at on complaints-per-branch basis.

Tiger Triumph-24 — India-US tri-services exercise to boost coordination begins

The exercise will be simulated to undertake HADR operations in a ‘friendly island nation’, where troops will execute amphibious landing ops.

CAA comes not with a bang, but with a whimper. Without NRC, it will fade into academic debate

For BJP, CAA was strategic move that did not quite work out because those it would benefit could’ve been accommodated under existing laws, and new entrants would remain excluded.