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MPC must maintain stable policy rates in the current scenario
Equities, Markets - January 29, 2025

MPC must maintain stable policy rates in the current scenario

MPC must maintain stable policy rates in the current scenario

Overview
In the month of February, the Reserve Bank of India’s Monetary Policy committee will take a decision on policy rates based on the effectiveness of the current policy rates on the economy. Under the guidance of new RBI governor, Sanjay Malhotra, the committee will take into consideration recent data of growth in GDP and consumer price index-based inflation.

In the third quarter of the financial year 2025, the CPI was around 5.6 percent which was higher than the target set but in order of the projections of RBI. While the expected actual growth in GDP is about 6.4 percent in the financial year 2025 in check with the GDP projection of the RBI which is 6.6 percent. Based on these aligned results, MPC will prepare future projections on inflation risks and growth aspects.

Recent Condition of India
After the MPC meeting in the month of December, there has been an increase in threats about short-terms risk in price stability. In present times, the Indian rupee faced depreciation of about three percent. The reasons for this are rising uncertainty about the USA position on tariffs, increased strength of dollar in the market, high fluctuations in the financial markets have resulted in affecting inflation level and rates.

In the year 2025, the Federal Reserve of USA has decided to maintain a hawkish stance and hints at not many reductions in rates. It led to development of cautious sentiments in the investors.

Baseline Projections of RBI
It states that the overall inflation in India is projected to be more than the target of 4 percent for the upcoming six months. There will be high food inflation but with a gradual decline in it. In contrast to this, core inflation will remain consistent. Both food and core inflation will be in between 4.5 percent to 5 percent in the upcoming 6 months. The depreciation of the rupee acts as an upside risk to these forecasts.
Comparatively inflation in India is high leading to overvaluation of the Indian Rupee and which in turn makes export of the country expensive. To resolve this issue, India needs to lower the value of the rupee in nominal terms. It also has to be cautious about price stability as steps taken for disinflation can lead to a burden on the cost of imported goods.

Projections of GDP
RBI’s projection on GDP is strong growth. According to it, India will speed up its growth in GDP from the second half of the financial year. In the financial year 2024-2025, its expected actual GDP is below the previous financial year’s GDP growth. While the nominal GDP is projected to remain the same for the current financial year as well. It was 9.6 percent in the previous financial year and is expected to be 9.7 percent in the current financial year. The reason lower actual growth is probably due to rising inflation levels. It has adversely affected demand levels in urban areas. It hints at the requirement of vigilant monetary policy steps towards the situation.

The expectation of the IMF is about 6.5 percent growth in the upcoming two years in India. The anticipation seems reasonable in nature. It will be aided by fixed financing by the upcoming budget. The government of India is also focusing on aspects like consistent growth in tax collection and fiscal consolidation.

Factors affecting growth
In the current financial year, lower capital expenditure led to moderate growth in investments which in turn led to cutting of development in nearly half. However, this scenario will possibly change as capex increases. On the other hand, private consumption is going to be supported by continuing return to health in rural demand. The growth in the service sector will help to boost urban demand.

Overall, the growth perspective of the financial year is going back to its potential growth level. It was earlier higher than 7 percent for three years in a row. In this scenario, it is better for India to maintain a cautious approach.

Liquidity issues
RBI must focus on keeping the weighted average call rate in the range of policy rates. From the second half of December, the country is facing an issue of liquidity deficit. The RBI took the decision of reducing CRR to about 50 basis. It also has taken actions such as daily variable rate repo auctions. Even in the condition of prevailing liquidity deficit, it has helped in keeping the call rate in the range of 6.50 percent of repo rate and 6.75 percent of marginal standing facility. Overall, it is able to keep the short-term rates at a secure level. Also, rates of deposits and credits of banks are at steady levels. Despite contraction in loan growth of the bank which was 12.5 percent, it is higher than nominal growth in GDP. The trend of government and corporate bond yields is also stable.

In the month of October, RBI had a liquidity surplus of about Rs. 4.885 trillion. In present times it is contracted to Rs. 64,350 crore. It can lead to higher rates in the economy. Also, policy cuts without sufficient liquidity can lead to weak impact on the economy.

Focus on Price Stability
In case the sale of dollars leads to contraction in liquidity, RBI can do open market buying of government bonds as it has already reduced CRR rates. In the current scenario of the US uncertainty, RBI must concentrate on price stability to maintain stability in the economy.

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Asian Stocks advance on tech rebound
Equities, Markets - January 23, 2025

Stimulate Economic growth by tax relief, deregulation, and expansion of capex

Stimulate Economic growth by tax relief, deregulation, and expansion of capex

Overview
Chairman and managing partner of EY India, Rajiv Memani stated that to boost economic growth in India, the government of India has to focus on factors such as deregulation of firms, tax relief to population on their personal income, expansion of capital spending, and also improvement in the business-friendly environment in India.

He further states that if the government of India implements these factors, and also raises funds from capital markets or disinvestments, it will help to observe if these factors can be implemented at faster speed to boost economic growth in the country.

Reason for weak economic growth
In recent times, the economic growth has weakened. The reasons for this are seasonal variations in several industries, and uncertainty among investors due to general elections. Apart from this, it is due to a number of geopolitical tensions in the world leading to an impact on pricing of international products. This has ultimately resulted in affecting the growth of GDP in India.

Steps to be taken for boosting economic growth
During the past few quarters, growth of India’s GDP has faced a slumping trend. The country’s annual growth is expected to grow by about 6.4 percent. Also, the budget 2025 is anticipated to have some capital spending plans which will help to boost the investment cycle in the economy and in turn stimulate economic growth of India.

In the previous six months, the lower consumption levels have resulted in slowdown in economic growth. He further states that tax relief in personal income will help stimulate consumption levels in the market. It will give relaxation to economic classes such as the middle-income and lower income population living in urban areas and also to the population living in rural areas. However, the government of India needs to make sure that it fulfills its promise of sustaining fiscal deficit at low levels, while implementing tax relief.

Adoption of ease of doing business and deregulation in the economy will also aid India’s GDP growth. Memani supported this idea with the plans of Trump 2.0 to lower the intervention of the federal government. He also believes that this will become a pattern followed by many countries in the world. He thinks that countries around the globe will take actions to make business easier to operate in the country. In present times, there are many regulations and requirements of approval to operate or start a business. Also, the process of finalisation of capital expenditure plans is also slow. If measures are taken to reduce this, it will help in boosting the economic growth in the country.

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Private Investments and Employment Set for Growth in India, CII Survey Shows
Business, Equities, Markets - January 20, 2025

Private Investments and Employment Set for Growth in India, CII Survey Shows

Private Investments and Employment Set for Growth in India, CII Survey Shows

Overview
According to a Confederation of Indian Industry (CII) survey, private investments—which are vital for economic expansion and job creation—are expected to pick up steam in the upcoming quarters after stalling out in recent years. The current state of the Indian economy is favorable for private investments, and the nation is emerging as a “bright spot” in the difficult global environment. By the first week of February, 500 firms would have participated in the ongoing pan-India survey. A sample of 300 businesses from all industry sizes (Large, Medium, and Small) served as the basis for the intermediate results. In order to evaluate the increase in private sector investments, employment, and pay growth, an industry survey was carried out.

Major companies have boosted their workforce
Remarkably, preliminary findings indicate that around 97% of the sample companies are anticipated to grow their workforces in 2024–2025 and 2025–2026. Indeed, according to 79% of the respondents’ companies, they have increased their workforce during the previous three years. According to the CII study, which was completed within the last 30 days, 75% of participants think that the state of the economy is favorable for private investment at the moment.

Further, India has emerged as a bright spot in this difficult global background, CII added, despite the fact that geopolitical fault lines have seriously hampered the global economy and disrupted global supply chains. The government’s prudent economic policies, which prioritized growth driven by public capital expenditures, contributed to the economy’s recovery.

Muted investment in the first half of the current fiscal quarter
An increase in private investments may be anticipated over the coming quarters, since 70% of the enterprises questioned stated that they will make investments in FY’26, according to Chandrajit Banerjee, Director General, CII.

One of the main causes of the drop in economic growth during the first half of the current fiscal year was muted investment. During the July–September 2024 period, India’s GDP growth fell to a seven-quarter low of 5.4%. Official projections predict that GDP growth will be 6.4% for the year. Because of restrictions relating to the Lok Sabha election, government capital expenditures were low in the first half of the fiscal year. According to Deloitte’s recent India Economic Outlook study, investors’ views were affected by global concerns regarding future trade, investment outlook, and changing technology and its impact, even if muted urban demand has been one of the factors driving low private sector investment.

Employment in the Manufacturing and Services Sector
It is anticipated that the manufacturing and services sectors will see an average growth in direct employment of 15 to 22 percent over the course of the upcoming year as a result of planned investments. The initial results on indirect employment showed similar forecasts, with manufacturing and service firms anticipating increases in indirect employment of roughly 14% and 14%, respectively, over current employment levels.

CII Forecasts Steady Economic Expansion and Rising Wages
Regular and contractual workers take less time to fill a vacant position, indicating the need to fill the availability of skilled staff at the higher level in sample firms. The majority of the firms surveyed suggested that it takes anywhere from one to six months to fill vacancies at the Senior Management, Management/Supervisory level.

Given the favorable outlook for the two key growth drivers, employment and private investments, the CII is optimistic that overall growth will likely stay steady at 6.4% to 6.7% this year and reach 7% in FY26. Banerjee stated. The average compensation rise for Senior Management, Managerial/Supervisory jobs, and regular workers increased by 10 to 20 percent in FY25, according to 40 to 45 percent of sample firms polled. This wage growth has an effect on personal consumption. Further, in FY 24, the pattern was comparable.

Conclusion
These are encouraging findings that demonstrate assurance on some of the key facets of the economy. The Director General of CII emphasized that the survey’s findings, when viewed in conjunction with other new economic indicators, will contribute to a thorough picture of the economy.

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India Eyes Stronger Growth in FY25, Stays on Fiscal Target Path
Business, Equities, Markets - January 14, 2025

India Eyes Stronger Growth in FY25, Stays on Fiscal Target Path

India Eyes Stronger Growth in FY25, Stays on Fiscal Target Path

India’s government is poised to project higher economic growth for the upcoming fiscal year, signaling optimism amid recent slowdown concerns. According to government officials, the anticipated nominal GDP growth is expected to be between 10.3% and 10.5%, surpassing the current fiscal year’s forecast of 9.7%.

This positive outlook aims to alleviate market apprehensions about an economic deceleration that have emerged since November. Despite this optimism, the economy is projected to experience its slowest growth in four years during 2024/25.

N.R. Bhanumurthy, director at the Madras School of Economics, considers the nominal GDP estimate for the next fiscal year to be realistic. He attributes potential growth to increased government capital spending, advancements in agriculture, and a resurgence in exports.

Finance Minister Nirmala Sitharaman is expected to announce personal income tax reductions in the forthcoming budget on February 1. This move aims to stimulate demand among salaried individuals who have curtailed discretionary spending due to sluggish wage growth and elevated food inflation.

Importantly, these tax cuts are not anticipated to derail India’s fiscal consolidation efforts. The government projects the current fiscal year’s budget deficit to be 10 to 20 basis points below the initially estimated 4.9%, partly due to spending delays caused by last year’s national elections and monsoons. Additionally, the target to reduce the fiscal deficit to below 4.5% in the forthcoming financial year remains intact.

Nominal economic growth, which combines real GDP and inflation, serves as a foundation for forecasting government revenue, expenditure, and deficits. Prime Minister Narendra Modi’s administration has previously implemented measures such as corporate tax reductions, production-linked incentives for manufacturers, and increased infrastructure spending to bolster growth.

Despite these initiatives, challenges persist. Job creation has not kept pace with the needs of the world’s most populous nation, and wage growth for urban salaried workers remains subdued. Consequently, discretionary spending has declined, exacerbated by significant increases in food prices, particularly vegetables.

Business groups are advocating for additional measures, including reductions in fuel taxes, sustained infrastructure investment, and lower import duties, to further stimulate economic activity.

In summary, while the Indian government is set to forecast stronger economic growth for the next fiscal year and remains committed to fiscal discipline, addressing underlying challenges such as job creation, wage stagnation, and inflation will be crucial to achieving these projections.

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2025: A Year of Consolidation and Policy-Driven Growth
Business, Equities, Market News, Markets - December 30, 2024

2025: A Year of Consolidation and Policy-Driven Growth

2025: A Year of Consolidation and Policy-Driven Growth

As we step into 2025, the Indian equity market is poised for a phase of consolidation, with policy-driven actions expected to be the key factor shaping investor sentiment. This follows a volatile yet rewarding 2024, where the Nifty delivered robust 12.5% returns (January–November 2024) amidst a broad-based rally across multiple sectors.

2024 Highlights: Broad-Based Rally with Sectoral Leadership
The year saw remarkable sectoral performances:

Defence (+62%), Healthcare (+34%), and Realty (+31%) led the pack.
Capital Goods (+28%), Auto (+27%), and IT (+24%) also posted stellar returns.
In contrast, FMCG started strong but tapered off in the latter half, delivering a modest 3.6% return, reflecting weak rural consumption. Banks underperformed with 8.9% returns, trailing the broader market despite strong fundamentals.

Mid and small caps continued to shine, outperforming large caps for the fourth time in five years, as investors gravitated towards high-growth companies and niche opportunities.

Global and Domestic Influences
Indian equities outpaced broader emerging markets, although US markets (S&P 500) delivered an impressive 28% return during the same period. Global events, from geopolitical tensions to elections in over 65 countries, had limited impact on market volatility.

In India, the initial market reaction to election results was subdued, but a united coalition restored confidence. Globally, the interest rate easing cycle commenced mid-year, with major economies like the US, UK, and Europe cutting rates on lower inflation expectations.

However, India refrained from rate cuts due to high food inflation and external uncertainties, including the US elections. Despite this, the Indian rupee remained resilient, depreciating just 2% YTD, outperforming other emerging market currencies.

Economic Moderation Amidst Fiscal Consolidation
Economic growth moderated in 2024, impacted by election-related slowdowns in Q2 and excess rains in Q3. Corporate earnings followed suit, with analysts trimming growth forecasts for FY25.

Domestic liquidity, however, remained a strong pillar. Record SIP inflows in November 2024 and a robust mutual fund industry, now managing an impressive INR 68.1 trillion AUM, underscore the growing financialization of savings.

2025 Outlook: Policy Actions in Focus
The foundation for 2025 appears strong, but much depends on key policy interventions:

Interest Rate Easing Cycle: Expected to begin in Q1 2025, potentially boosting growth across sectors.
Global Trade Policies: US tariff decisions will be critical, particularly for emerging markets.
Sectoral Opportunities in 2025
Capital Expenditure: Early signs of recovery are evident, with new defence and road sector orders announced in late 2024. Rising power demand and peak deficits should also drive investments in the power sector.
Private Capex: Healthy corporate balance sheets, strong cash flows, and improved capacity utilization are setting the stage for sustained private sector investment.
Real Estate: Lower inventories, better affordability, and expected interest rate cuts could further fuel growth.
Manufacturing: Regulatory support, global supply chain diversification, and India’s cost advantage position manufacturing as a key growth driver.

Flows and Valuations
FII flows, which turned negative towards the end of 2024, are expected to return as valuations correct and India’s weight in the EM Index normalizes. Meanwhile, domestic flows are likely to remain robust, driven by record SIP contributions and increasing retail participation.

Consolidation Year with a Growth Bias
While the first half of FY25 may witness subdued earnings, a recovery in the latter half is likely as macro conditions stabilize. With the Nifty trading near its long-term average valuations, 2025 offers a mix of consolidation and selective growth opportunities. Investors should remain vigilant, focusing on sectors poised to benefit from policy actions and structural tailwinds.

In summary, 2025 is set to be a pivotal year, laying the groundwork for long-term sustainable growth in Indian equity markets.

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GDP likely grew by a median 6.3% in Q3, slightly higher than RBI’s 6.2% estimate
Business, Equities, Market News, Markets - December 27, 2024

Q3 FY25: A Crucial Turning Point for India’s Growth Story

Q3 FY25: A Crucial Turning Point for India’s Growth Story

India, the torchbearer of post-pandemic economic recovery among major economies, has hit a rough patch. The nation, which averaged 8.3% GDP growth over the last three years, delivered an underwhelming performance in Q2 FY25. The 5.4% GDP growth for the quarter, a 7-quarter low, marked the third consecutive decline, falling significantly short of expectations.

While the government and the Reserve Bank of India (RBI) remain optimistic, the slump has raised concerns about the sustainability of India’s growth trajectory. The Finance Minister recently called the Q2 GDP figures a “temporary blip,” and the RBI’s December bulletin pointed to promising high-frequency indicators for Q3. But can the upcoming quarter provide the promised respite?

Unpacking the Q2 Disappointment
A closer look at Q2 reveals several headwinds that dampened growth. Export weakness due to global challenges and subdued government spending weighed heavily. Election-related disruptions limited fiscal spending, with revenue expenditure growing by just 8.7% year-on-year and capital expenditure—critical for long-term growth—seeing a contraction.

Gross fixed capital formation grew by a modest 5.4%, with heavy monsoons curbing mining and quarrying activity. The manufacturing sector stumbled, recording just 2.2% growth, its slowest in five quarters, though services offered a silver lining with a robust 7.1% growth. Private consumption, a critical growth driver, held firm, growing by 6% on strong rural demand.

Glimmers of Hope: What Q3 Might Deliver
Encouragingly, rural consumption has remained resilient in Q3, buoyed by favorable monsoons. Indicators such as a spike in scooter sales and fuel consumption reflect robust rural activity. Urban demand, though tepid in October, improved in November, with passenger vehicle sales growing by 4.4%.

Government capital expenditure is expected to pick up pace as the fiscal year progresses. Private capital expenditure, however, remains uneven, with growth concentrated in renewable energy and similar sectors. Steel consumption rebounded in November, offering a glimmer of hope, but overall capex momentum is yet to take off decisively.

On the external front, trade dynamics remain a concern. November saw merchandise exports contract by 4.8%, while imports surged by 27%, resulting in a record trade deficit of $37.8 billion. Services exports, while growing at 22.3%, lagged behind the 27.9% rise in service imports, further widening the trade gap.

Despite these challenges, Q3 GDP is projected to recover to 6.8%, with a slight moderation to 6.5% in Q4, as per the Economic Activity Index.

Implications for Indian Equities
Indian stock markets find themselves at a crossroads. Globally, the economic slowdown in Europe, China’s competitive stimulus measures, and geopolitical tensions create an unfavorable backdrop. A stronger dollar has pushed the rupee to an all-time low, making imports costlier and dampening foreign investor sentiment.

Domestically, the Nifty 50 index faces technical challenges, hovering precariously above its 200-day moving average and forming a bearish head-and-shoulders pattern. Valuations, while more reasonable after recent corrections, still hinge on strong earnings growth.

The road ahead depends on a mix of factors. Monetary easing, anticipated early next year, could provide much-needed support to corporate earnings. If Q3 earnings reflect the improvements indicated by high-frequency data, it might offer a much-needed catalyst for market sentiment.

Conclusion
India’s economic story is at a critical juncture. While Q2 FY25 highlighted vulnerabilities, the resilience in rural demand and government capex offers a silver lining. The coming quarters will test the economy’s ability to navigate external pressures and domestic challenges. For equity markets, the wait for a fundamental revival continues, with hopes pinned on Q3 earnings and a potential shift in monetary policy.

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GDP likely grew by a median 6.3% in Q3, slightly higher than RBI’s 6.2% estimate
Business, Equities, Expert Views, Investor Forum, Market News, Markets - October 10, 2024

India's GDP Growth to Slow in FY25, Manufacturing and Financial Sectors Pose a Drag

India’s GDP Growth to Slow in FY25, Manufacturing and Financial Sectors Pose a Drag

India’s gross domestic product (GDP) is set to experience slower growth in FY2025, according to Nikhil Gupta, Chief Economist at Motilal Oswal Financial Services. Gupta predicts a deceleration in growth from the exceptional 8.2% recorded in FY2024 to approximately 6.1%, a figure notably below the Reserve Bank of India’s (RBI) projection of 7.2%. The economist attributes this expected slowdown primarily to challenges in the manufacturing and financial sectors, along with an unusual base effect from the previous fiscal year.

“The high growth in net indirect taxes, which was a key driver of the 8.2% GDP growth last year, is unlikely to sustain,” Gupta explains. In FY2024, the Gross Value Added (GVA) was 7.2%, significantly lower than GDP growth, indicating that the high GDP number was largely tax-driven. Gupta anticipates this gap will narrow in FY2025, with GVA growth expected to come in at around 6.3%, while GDP will likely trend closer to 6.1%.

The manufacturing and construction sectors, which benefitted from a deflator effect in FY2024 due to negative wholesale price index (WPI) inflation, are unlikely to see the same favorable conditions in FY2025. “The WPI deflator that boosted real growth last year will not be favorable this time around, especially for manufacturing,” Gupta notes. Additionally, services sector growth is expected to slow, as credit expansion may not be as robust as it was previously. However, agriculture could provide a buffer with better performance this fiscal year, following a weak showing in FY2024.

Consumption Patterns and the K-Shaped Recovery
Despite the overall slowdown in GDP growth, there is a positive trend in consumption. Gupta observes that real consumption growth, which was just 4% in FY2024—the slowest barring the COVID years—could pick up slightly to 5-5.5% this year. This growth, while modest, is still lower than historical levels, where aggregate consumption often expanded by 7-8%. However, Gupta believes that the direction of consumption growth is more important than the absolute number.

“The K-shaped recovery in consumption, where the wealthier segments of society benefitted disproportionately, might be narrowing,” he says. This recovery pattern was evident during the pandemic, where luxury goods and high-ticket items continued to perform well, while low-income groups struggled. Now, there are signs that this gap is closing, particularly in rural areas. Gupta anticipates that rural consumption, which has lagged behind urban consumption for the past two years, could outpace it in FY2025, driven by better agricultural output and improved income levels.

However, Gupta cautions that this narrowing of the K-shaped recovery is based on anecdotal evidence rather than concrete data. While it is clear that urban consumption has been strong, the real test will be whether rural consumption can sustain its momentum throughout the year.

Capital Expenditure and Long-Term Investment Growth
When it comes to capital expenditure (capex), Gupta offers a cautiously optimistic view. “Investment growth was significantly higher in FY2024, and we expect it to expand again in FY2025, albeit at a slower pace,” he says. Total investments as a percentage of GDP reached 33% last year, the highest in a decade, and this ratio is expected to remain flat over the next two years.

Capex, Gupta argues, is influenced by consumption trends but on a longer-term horizon. While consumption drives manufacturing investments, the effect is not immediate. “You cannot link capex to consumption on an annual basis,” he explains. Despite the expected slowdown in consumption and manufacturing growth, the overall investment environment remains positive, with infrastructure and public investments likely to support capex growth.

External Headwinds and Global Risks
One of the key risks to India’s economic outlook comes from external factors. Gupta highlights the uncertainty surrounding the global economy, particularly in the United States. “Everyone has been fearing a recession in the US, but so far, it hasn’t materialized,” he says. However, he remains cautious, noting that the prolonged period of high interest rates in the US has yet to fully impact consumer spending, capex, and employment trends.

While the US economy continues to defy expectations, Gupta warns that the effects of high borrowing costs could still materialize with a lag. “Higher mortgage costs should, in theory, reduce consumer spending and eventually impact investments, labor demand, and wage growth,” he explains. If this transmission mechanism begins to take hold, it could dampen global growth and, by extension, India’s export-driven sectors.

Geopolitical risks, particularly in the Middle East, add another layer of uncertainty. Rising oil prices, driven by geopolitical tensions, could increase inflationary pressures in India, which remains heavily dependent on oil imports. “If commodity prices, especially oil, start to rise sharply, it could create headwinds for both growth and equity markets,” Gupta warns.

Inflation and Rate Cut Trajectory
On the domestic front, inflation remains a concern. While inflation was below the RBI’s target of 4% in recent months, Gupta expects it to rise to around 4.5% by the end of FY2025. “This is still a manageable level, but it raises questions about whether growth can continue at the RBI’s projected rate of 7% with inflation hovering at these levels,” he says.

Regarding interest rates, Gupta forecasts a gradual easing by the RBI, with the first rate cut likely in early 2025, though a December cut cannot be ruled out. “Much will depend on the Q2 GDP data and global developments,” he adds. Gupta expects a cumulative rate cut of 100 basis points (bps) by the end of FY2026, with the first 25 bps cut potentially coming in FY2025.

Foreign fund flows into India are likely to remain strong, provided that India’s growth and corporate earnings continue to outpace other major economies. However, Gupta cautions that rising geopolitical risks and inflationary pressures could create volatility in equity markets, particularly if commodity prices surge.

In conclusion, while India’s growth prospects for FY2025 are expected to slow compared to the previous year, the economy remains resilient. Consumption trends are improving, particularly in rural areas, and investments are likely to remain stable. However, external risks, inflation, and the global economic outlook will continue to pose challenges in the months ahead.

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Business, Markets - July 16, 2022

The Indian economy is expected to grow by 7.1-7.6%.

The Indian economy is expected to grow by 7.1-7.6%.

In FY23, a growth of 7.1-7.6 percent will be witnessed in Indian economy. India will rule as the world’s fastest-growing economy over the next few years. Regardless of geopolitical issues, inflation, interest rate hikes, or Omicron infections.

In 2021, India had many opportunities to grow, but the Russian invasion in Ukraine and the new COVID-19 wave cleaned up all the optimistic events. These events intensified the pre-existing challenges such as surging inflation and geopolitical realities with no definite end in sight. The succeeding convergence of events like surging commodity prices, supply shortages and currency depreciation quickly worsened the Indian economy’s fundamentals that were trending up a few months back.

The Central Bank of India forecasts 7.2% GDP growth for FY23, which ends in March. The Indian rupee will recover against the US dollar, but not before the beginning of next year. The rupee depreciated by 3 paise to close at a record low of 79.62 (temporary) against the US currency on Wednesday. The desire of global businesses to look for more robust and cost-effective investments during difficult times, among other factors, could work to India’s benefit.

Inflation in India is expected to come close to 5% by March. There is a 20–30% possibility that there could be a global recession in the economy. The aggressive monetary tightening policy followed by inflation may lead to recession, particularly in the US economy. The slowdown in inflation in the past two months is possible because of steps taken by the government. This includes cuts in taxes on oil and gas, restrictions on food exports and global breakdown in commodity prices. The government increased GST rates to offset any inefficiencies in the value chain. Globally, surging inflation has been the main factor as it concerns both demand and supply side concerns.
The report also mentioned that uncertainties in the global business environment will have significant risks.

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US Fed signals no rate cuts
Business, Economy - June 20, 2019

US FED keeps rate unchanged. Signal possible rate cuts next year

The Federal Reserve might scrap the patient approach and possibly open doors to potential rate cuts this year. In the updated economic projections issued by the Federal Reserve on 19th...
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