India’s public sector borrowings remain sticky and at elevated levels; however, the underlying mix has been changing. The period FY13-17 was characterised by the Central government lowering its fiscal deficit, and states of
There is no agency in the government that looks comprehensively at both Central and state, fiscal costs and revenues, and relating them to the fiscal rules that the country has enacted.
Instead of deflating output and input with their respective prices, the statistics agency deflates both with a common output deflator. Therefore, when input and output prices are moving in opposite directions, a bias can aris
Improvement in rural wages is not good enough. It is just a return to trend growth after lying below it for a while, and more importantly, trend growth is falling.
A constantly changing growth and inflation nexus, and delays in monetary transmission, suggest the rate decision in the upcoming RBI policy meeting on October 5 should be assessed over a multi-year horizon.
Depending on the global environment, potential growth could rise meaningfully from 2020, led by higher investment and growth dividends from recent reforms.
RBI may hike rates as soon as August as FY19 inflation rises, on the back of MSP-hikes, rising crude prices, etc. the case for further hikes in FY20 is weak as the pressures abate
State deficits are set to narrow, though marginally, in FY19. But the debt-bill cloud looms large while the drag from govt finances will have its bearing on growth.
We have said this before, and have found new evidence since. Inflation in India has fallen dramatically, and while the excessively low levels of FY18 may not be sustainable as some of the drivers are short-lived, we think the
The state of India’s rural economy is puzzling. There is enough evidence to support both opposing statements: one, that the rural economy has improved, and two, that the rural economy is in the doldrums.
The government, over the last few days, finalised GST rates that could blunt the reform’s growth impact. It has decided on multiple tax rates and exemptions, moving further away from an ‘ideal’ structure.
The RBI held on to its 5.1% CPI inflation forecast for January-March 2017, but highlighted that there were upside risks now versus the scope for downside surprise last time.
