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New Delhi [<keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>], March 1 (ANI): In a research report titled "When 8 per cent becomes the new normal: Decoding the new normals of a GDP on swing," the State Bank of India's Economic Research Department unveils key insights into India's economic landscape, shedding light on the recent GDP surge and providing projections for the future. The report highlights the unprecedented growth witnessed in India's economy during the third quarter of FY24, defying all estimates and expectations. India's GDP expanded by a remarkable 8.4 per cent during this period, following consecutive quarters of over 8 per cent growth. This surge has been attributed to effective policy frameworks and perspectives, which have surpassed irrational market expectations. The buoyancy in indirect tax collection, marked by a 32 per cent year-on-year growth amounting to Rs 3.9 lakh crore, further underlines the robustness of the economy. As a result, projections for FY24 indicate a GDP growth of 7.6 per cent and Gross Value Added (GVA) growth of 6.9 per cent. The report suggests that the GDP growth for the fourth quarter could be around 5.9 per cent, indicating a potential attainment of 8 per cent growth for the fiscal year. Significant revisions in both annual and quarterly numbers have led to upward adjustments in the GDP figures for FY22 and FY24. This revision has propelled the Year-to-Date (YTD) GDP growth rate above the 8 per cent mark. However, downward revisions in FY23 GDP numbers have implications for the fiscal deficit, necessitating an upward revision to 5.9 per cent of GDP for FY24. Delving into sectoral performances, the report highlights stellar performances in <keyword id="20788019" type="General" weightage="20" keywordseo="manufacturing-and-services" source="keywords">Manufacturing and Services</keyword>, buoyed by significant growth in industry, manufacturing, and construction sectors. However, the agriculture sector witnessed a decline of -0.8 per cent in Q3, attributed to uncontrollable factors. Moreover, the report underscores remarkable milestones achieved in terms of per capita GDP, with current prices crossing the Rs 2 lakh mark in FY24. Decadal Compound Annual Growth Rate (CAGR) stands at 8.9 per cent, with notable increases observed even in constant prices. Notably, post-pandemic recovery has seen a substantial jump in per capita GDP. The report also analyzes investment and savings trends over the past decade, revealing an increase in Gross Capital Formation (GCF) and gross savings. <keyword id="19964112" type="General" weightage="20" keywordseo="noteworthy" source="keywords">Noteworthy</keyword> is the improvement in the <keyword id="20788020" type="General" weightage="20" keywordseo="incremental-capital-output" source="keywords">Incremental Capital Output</keyword> ratio (ICOR), indicating increasing efficiency of capital utilization and laying the groundwork for sustained economic growth. In conclusion, the findings of the SBI report suggest a promising outlook for India's economy, with the potential for sustained growth at 8 per cent in FY25. (ANI)

SBI report deciphers India's GDP surge and economic projections

New Delhi [<keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>], February 5 (ANI): The Monetary Policy Committee of the Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>) in its February review meeting is expected to again put a pause on the repo rate, according to <keyword id="20112035" type="General" weightage="20" keywordseo="sbi-research" source="keywords">SBI Research</keyword>. In its December meeting, the RBI unanimously decided to keep the policy repo rate unchanged at 6.5 per cent, thus maintaining the status quo for the fifth straight time. The repo rate is the rate of interest at which RBI lends to other banks. "We expect the RBI to continue pause stance in upcoming policy. Strong US non-farm payroll data and wages seem to have pushed back on market expectations for a quick pivot to rate cuts," said the research report Ecowrap as a prelude before the three-day RBI meeting that starts Tuesday. The reports said that the first repo rate rate cut could be on the table from June 2024. "Aug'24 looks the best bet now...," it said. The RBI typically conducts six bimonthly meetings in a financial year, where it deliberates interest rates, money supply, inflation outlook, and various macroeconomic indicators. A relative decline in inflation, barring the latest spike, and its potential for further decline may have prompted the central bank to put the brake on the key interest rate. Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory quite well. Barring the latest pauses, the RBI raised the repo rate by 250 basis points cumulatively to 6.5 per cent since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline. The retail inflation in India though is in RBI's 2-6 per cent comfort level but is above the ideal 4 per cent scenario. In December, it was 5.69 per cent. The <keyword id="19901377" type="General" weightage="20" keywordseo="us-federal-reserve" source="keywords">US Federal Reserve</keyword> in its January meeting voted to leave the key interest rate unchanged at 5.25-5.50 per cent, keeping the policy rate unchanged for the fourth straight time on a trot. The US monetary policy committee in its statement said that the recent indicators suggested that economic activity has been expanding at a solid pace. <keyword id="19951097" type="General" weightage="20" keywordseo="us-fed" source="keywords">US Fed</keyword> had raised interest rates from near zero to now 5.25-5.50 per cent in the fight against inflation, post-COVID. US inflation in December was 3.4 per cent. US Federal Reserve's commitment has been to bring down consumer inflation to its target of 2 per cent. (ANI)

Expect RBI to again pause repo rate in February policy meeting: SBI Research

New Delhi [<keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>], February 28 (<keyword id="19904948" type="General" weightage="20" keywordseo="ani" source="keywords">ANI</keyword>): The State Bank of India's Economic Research Department has released its analysis projecting the GDP growth for the third quarter of the financial year 2023-24. According to their report, the GDP growth is likely to be at 6.8 per cent, based on an unchanged base, but could potentially hit 7 per cent due to expected downward revisions in the estimates for Q3 FY23. As per a report by <keyword id="20407500" type="General" weightage="20" keywordseo="soumya-kanti-ghosh" source="keywords">Soumya Kanti Ghosh</keyword>, Group Chief Economic Adviser, SBI, the global economic landscape, as outlined in the report, presents a mixed picture with several significant developments impacting the trajectory. The International Monetary Fund (IMF) has upgraded its global growth forecast to 3.1 per cent in 2024 and 3.2 per cent in 2025, indicating a brighter outlook. However, challenges persist, with countries like the UK and Japan slipping into recession, alongside concerns over the German economy. Additionally, China's marked slowdown, driven by deflationary concerns and declining industrial profits, adds further complexity to the global scenario. In contrast, India's domestic economic indicators show signs of resilience and optimism. Consumer confidence has strengthened, supported by positive sentiments regarding the economic situation and employment conditions. Various enterprise surveys also reflect strong business optimism. The Composite Leading Indicator (CLI) Index, comprising 41 leading indicators across sectors, suggests a slight moderation in economic activity in Q3 FY24. Based on this data, the SBI Economic Research Department estimates GDP growth in the range of 6.7-6.9 per cent, with a Gross Value Added (GVA) growth of 6.6 per cent. Corporate India continues to exhibit robust performance, driven by accelerating consumption patterns across urban and rural areas. Corporate results for Q3FY24 indicate significant growth in <keyword id="20140796" type="General" weightage="20" keywordseo="ebidta" source="keywords">EBIDTA</keyword> and PAT (Profit After Tax), with a notable improvement in margins. Corporate GVA, measured by EBIDTA plus employee expenses, recorded strong growth compared to the previous year. The agricultural sector, however, faces some challenges, with a decline in the estimated production of major Kharif crops for 2023-24 compared to FY23. While the sowing season for Rabi crops suggests a slight increase in overall acreage, concerns arise over the decline in the sown area under cereals. Despite these challenges, the inland fish production has shown rapid growth, reaching 131.13 lakh tonnes in 2022-23. The fisheries sector's contribution to the national GVA and agricultural GVA indicates potential support for the Agri &amp; Allied sector's growth in FY24. (ANI)

SBI Eco Research forecasts Q3 FY24 GDP growth at 6.8% amid global complexities

New Delhi, Along with the sharp decline in poverty in <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>, there has also been a marked reduction in the rural-urban income divide in the country, according to an SBI Research analysis of a Consumer Expenditure Survey released on Tuesday. Rural Poverty has staged a significant 440-basis point decline since 2018-19 and <keyword id="20742154" type="General" weightage="20" keywordseo="urban-poverty" source="keywords">Urban Poverty</keyword> a 170-basis point decline post-pandemic, which shows that the government initiatives for promoting the welfare of the bottom of the pyramid are having a significant beneficial impact on rural livelihood, the report states. Rural Poverty is now at 7.2 per cent (25.7 per cent in 2011-12 while <keyword id="19945793" type="General" weightage="20" keywordseo="urban" source="keywords">Urban</keyword> Poverty is at 4.6 per cent (13.7 per cent in 2011-12), official data show. The report further states that India is becoming more aspirational as indicated by the increasing share of discretionary consumption (like spending on beverages, intoxicants, entertainment, durable goods, etc.) in rural and urban areas. The speed of aspiration is swifter in rural areas as compared to urban areas The SBI report states that the difference between rural and urban monthly per capita consumption expenditure (MPCE) is now at 71.2 per cent, a rapid decline from 88.2 per cent in 2009-10. Around 30 per cent of the Rural MPCE is explained mainly due to steps taken by the government in terms of DBT transfers, investments in building of rural infrastructures, augmenting farmer's income, all together improving the rural livelihood significantly. Enhanced physical infrastructure is enabling two-way rural-urban mobility, which is the prime reason for the incrementally shrinking horizontal income gap between the rural and urban landscape and the vertical income gap within rural Income classes, according to the SBI report. The states once considered laggards are showing the maximum improvement in rural and urban gap. States like Bihar, <keyword id="19894922" type="General" weightage="20" keywordseo="uttar-pradesh" source="keywords">Uttar Pradesh</keyword>, Madhya Pradesh are showing increasingly the impact of these factors, the report adds. The bottom half of the rural pyramid are now having consumption patterns mostly converging to urban counterparts. The report also states that revised MPCE weights in CPI computation could help India real GDP growth for FY24 to top 7.5 per cent. Other highlights: *Rural and Urban consumption are growing, on an average, at nearly the same growth rate (2.66 per cent for rural, 2.59 per cent for Urban) across classes. Using the statistical equivalent of <keyword id="20744250" type="General" weightage="20" keywordseo="gini-coefficient" source="keywords">Gini Coefficient</keyword>, Horizontal Consumption Inequality between Rural and Urban across fractiles has declined from 0.560 to 0.475 *Urban Rural gap as a percentage of rural consumption is on a declining trend. It has declined from 90.8 per cent in 2004-05 to 71.2 per cent in 2022-23 and we believe, is projected to further decrease to 65.1 per cent in 2029-30 *In the lowest segment, urban consumption is only 46 per cent more dissimilar than the rural counterpart. Across fractile classes, urban consumption is only 68 per cent more dissimilar than rural counterpart, a number much less than the all India average. This indicates the bottom half of the rural pyramid are now having MPCE patterns mostly converging to Urban counterparts.

India's rural-urban income gap declines sharply amid fall in poverty level: SBI Report

A research report by the <keyword id="19934368" type="General" weightage="100" keywordseo="state-bank-of-india" source="keywords">State Bank of India</keyword> (SBI) highlights the continuous upward trend in credit growth in Indian <keyword id="19934118" type="General" weightage="20" keywordseo="banks" source="keywords">banks</keyword>, which is outpacing the growth of deposits. This trend persists even as Indian households have substantially increased their investments in <keyword id="19929240" type="General" weightage="20" keywordseo="mutual-funds" source="keywords">mutual funds</keyword> and equities. For the last several months, investments of over Rs 21,000 crore are being done in mutual funds. Last month, during an event, <keyword id="20151998" type="General" weightage="20" keywordseo="RBI-Governor" source="keywords">RBI Governor</keyword> <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword> noted that households are opting for capital markets over banks to invest or park their savings. However, the <keyword id="20352499" type="General" weightage="20" keywordseo="SBI-report" source="keywords">SBI report</keyword> states, "Latest fortnightly credit and deposit growth number shows credit growth continues to outpace deposit, though moderated from last year growth of 16.2 percent (June'23 YoY)." Specifically, for the fortnight ending July 12, 2024 the report noted that the credit growth for All Scheduled Commercial Banks stood at 14 per cent on a year-on-year basis, while deposit growth was reported at 11.3 per cent. Furthermore, the report also served a significant increase in credit to the industrial sector, which rose from 5.1 percent in March 2023 to 8.4 percent in March 2024, and recorded 8.1 percent growth in June 2024 year-on-year. This indicates a robust demand for credit within the industrial sector. Despite big savings going towards the capital markets, banks have managed to gather an incremental deposit of Rs 7.02 lakh crore in the year-to-date (YTD) period ending July 12, 2024. In comparison, the incremental credit extended by the banks amounted to Rs 3.80 lakh crore during the same period. This discrepancy illustrates that while credit growth is substantial, deposit growth remains essential to maintain balance. Additionally, the report highlighted that banks' reliance on high-cost deposits, such as Certificates of Deposit (CDs), has more than tripled. This increase is a response to the need to match the rising credit demand, showing how banks are adjusting their funding strategies to accommodate the growing demand for loans. <keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword> Governor stated last month, "While bank deposits continue to remain dominant as a percentage of the financial assets owned by the households, their share has been declining, with households increasingly allocating their savings to Mutual Funds, Insurance Funds, and Pension Funds."

Credit growth in banks continues to exceed deposits, says new SBI report

<div type="image" title="SBI report says inflation will remain around 5 per cent this fiscal" agency="ANI" msid="112275933" hostid="261" caption="&amp;lt;p&amp;gt;SBI report says inflation will remain around 5 per cent this fiscal &amp;lt;/p&amp;gt;"></div>The Consumer Price <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">Inflation</keyword> in India is expected to remain around 5 per cent in the financial year 2024-25 except for September and October month, according to a research report by <keyword id="13222" type="General" weightage="20" keywordseo="sbi" source="Orion">SBI</keyword>. The report also noted that the inflation outlook in India remains a critical focus for the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (RBI). Recent data indicates that the <keyword id="19999655" type="General" weightage="20" keywordseo="Consumer-Price-Index" source="keywords">Consumer Price Index</keyword> (CPI) inflation rose to 5.08 per cent in June 2024, driven primarily by higher food and beverage prices. "CPI inflation is expected to remain below or close to 5.0 per cent in the remaining months, except for Sep'24 and Oct'24" said the report. The report also added that the monsoon season plays an important role in shaping food prices, and while the current monsoon has shown a satisfactory surplus, excess rainfall could lead to crop losses, adversely affecting food inflation. The RBI's ability to manage inflation expectations is crucial, especially as it navigates the delicate balance between supporting <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword> and maintaining <keyword id="19960158" type="General" weightage="20" keywordseo="price-stability" source="keywords">price stability</keyword>. "With monsoon progressing satisfactorily with 2 per cent surplus till date and progress of area coverage under Kharif crops showing 2.9 per cent yoy, we expect inflation to remain within RBI target in FY25. However, with La Nina getting precedence, excess rainfalls could result in crop loss and thus a negative impact on food prices" the report added. In response to the evolving economic landscape, the report mentioned that the RBI is likely to continue its stance of withdrawing accommodation. This approach aims to address inflationary pressures while ensuring that the economy remains on a growth trajectory. However, the central bank faces challenges in policy transmission, as deposit rates have shown downward rigidity despite a declining weighted average lending rate (WALR). This situation complicates the RBI's efforts to implement effective monetary policy. "Even though the Banks are chasing deposits to fund the incremental credit growth, RBI recent report suggests, the weighted average lending rate (WALR) on fresh rupee loan decreased by 11 bps from the beginning of the year (i.e. from 9.43 in January'24 to 9.32 in June'24)" the report noted. Looking ahead, the RBI's decisions will be influenced by both domestic and global economic conditions. The potential for a recession in the US and geopolitical tensions could impact inflation dynamics in India. As such, the RBI's monetary policy will need to remain flexible and responsive to these external factors while striving to achieve its inflation targets and support sustainable economic growth. (ANI)

SBI report says inflation will remain around 5 per cent this fiscal

New Delhi: <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword> has demonstrated a largely successful inflation targeting regime compared to advanced economies such as the USA, Germany, and France, according to a research report by the <keyword id="19934368" type="General" weightage="100" keywordseo="state-bank-of-india" source="keywords">State Bank of India</keyword> (SBI). The report credits government initiatives, the <keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>, and banks for addressing these issues over the past decade, allowing for better policy transmission and improved inflation management. "The success of Inflation Targeting in India is largely a byproduct of a vibrant financial ecosystem where <keyword id="23140158" type="General" weightage="20" keywordseo="rbi-government" source="keywords">RBI, Government</keyword> and the Banks are working closely in unison in ushering in market reforms" said the report The report highlighted that India experienced minimal deviations from its inflation targets between 2021 and 2024, setting it apart from other global economies facing greater inflationary challenges. It added that during 2021-2024, India recorded one of the lowest deviations from its inflation targets, highlighting the effectiveness of its inflation control measures. This success, the report points out, is largely a result of coordinated efforts between the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (RBI) and the central government. "India had a largely successful inflation targeting regime. Compared to advanced economies like the USA, Germany" said the report. As per the report the synchronization of monetary and fiscal policies, particularly during the pandemic, played a key role in maintaining price stability. It also emphasized that India's pre-inflation targeting regime faced several challenges that hindered the effective transmission of monetary policy. These challenges included sustained fiscal dominance, the presence of a large informal sector, significant informal financing, and inefficiencies in how banks priced their loan products. "Effectiveness of monetary policy in India's pre-Inflation Targeting regime was constrained by several India specific factors that affected transmission of the policy impulses through the interest rate channel" the report added. However, one of the key arguments in the report is that the RBI's inflation targeting has anchored inflationary expectations, even as food inflation remains high. The notion that headline inflation should exclude food prices was dismissed as counterfactual by the report. According to the study, the RBI's success in targeting inflation, despite food price volatility, has prevented a spill-over from food inflation to core inflation. The report stressed that the RBI's consistent communication of its inflation target--set at 4 per cent--has been crucial in successfully anchoring inflation expectations. By reinforcing its commitment to this target, the RBI has helped stabilize inflationary trends across the broader economy. The SBI report reinforces India's effective monetary policy framework, particularly in light of the global inflationary pressures seen in advanced economies like the US and Germany.

India handled inflation much better than US, Germany and France: SBI Report

New Delhi: India's Consumer Price Index (<keyword id="20468215" type="General" weightage="20" keywordseo="CPI" source="keywords">CPI</keyword>) <keyword id="19895000" type="General" weightage="100" keywordseo="inflation" source="keywords">inflation</keyword> dropped to 3.54 per cent in July 2024, its lowest in nearly five years, largely driven by a decline in <keyword id="20028256" type="General" weightage="20" keywordseo="vegetable" source="keywords">vegetable</keyword> <keyword id="19900607" type="General" weightage="20" keywordseo="prices" source="keywords">prices</keyword>. However, despite this positive development, the <keyword id="19934368" type="General" weightage="20" keywordseo="State-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="State Bank of India" meta.hostid="261" meta.entityid="State Bank of India">State Bank of India</keyword> (<keyword id="19898108" type="General" weightage="20" keywordseo="SBI" source="keywords">SBI</keyword>) has cautioned that the path forward may be challenging, according to the SBI research report. The dramatic reduction in vegetable inflation, which plummeted from 29.3 per cent in June to a mere 6.8 per cent in July, played a crucial role in achieving this multi-year low. The weighted contribution of vegetables to the overall CPI also shrank from 1.77 per cent in June to 0.55 per cent in July, underscoring their impact on the headline inflation figure. Additionally, the prices of fruits and fuel showed signs of moderation, contributing further to easing inflationary pressures. However, this broad-based relief was tempered by a slight uptick in core CPI inflation, which excludes food and fuel prices. The SBI's latest report highlights that the once-dominant "Follow the Fed" mantra appears to be waning, with an increasing number of central banks prioritizing domestic economic conditions over synchronizing with U.S. rate decisions, signaling a shift in global <keyword id="20104157" type="General" weightage="20" keywordseo="monetary-policy" source="keywords">monetary policy</keyword> dynamics. This decline in CPI marks the first time in half a decade that CPI inflation has dipped below the Reserve Bank of India's (RBI) target of 4 per cent, a feat largely attributed to a steep fall in vegetable prices. Core CPI rose from 3.12 per cent in June to 3.30 per cent in July, driven primarily by an increase in mobile tariffs. Notably, the transport and communication segment saw inflation rise sharply from 0.97 per cent in June to 2.48 per cent in July, indicating sector-specific pressures. The moderation in food inflation, which stood at 5.06 per cent year-on-year in July, was significantly influenced by a higher base effect. Despite this, concerns persist over the uneven distribution of monsoon rainfall, particularly in key foodgrain-producing states experiencing deficient precipitation. With La Nina conditions gaining strength, the possibility of excessive rainfall in August and September looms large, raising fears of crop damage that could reignite food price inflation. Looking ahead, inflationary pressures may persist, potentially exceeding the RBI's forecast of 4.5 per cent for FY25. The domestic growth momentum remains robust, with GDP expected to surpass 7 per cent in Q1 FY25. However, geopolitical uncertainties continue to pose risks to the growth outlook. The RBI, maintaining a tight liquidity stance to control inflation, has deferred potential rate cuts to December 2024 or February 2025. State-wise analysis reveals that the majority of states recorded CPI inflation rates below the national average, with only six out of 22 states experiencing higher-than-average inflation. Despite this, significant rural-urban inflation differentials were observed, with most states seeing higher inflation in rural areas compared to urban counterparts. Only four states reported higher urban inflation. Historically, when the U.S. Federal Reserve adjusts its interest rates, global capital flows are impacted, prompting central banks in emerging markets to follow suit. However, while the Fed's recent rate hike cycle (2022-2023) saw a synchronized global response, the current rate-cutting phase is proving to be less coordinated. Central banks in countries like China, Chile, Brazil, Mexico, the UK, Canada, and the European Central Bank have already begun reducing rates, while the Fed is expected to initiate cuts in September 2024. India's Index of Industrial Production (IIP) grew by 4.2 per cent in June 2024, down from a revised 6.2 per cent in May. The mining sector led the growth with a 10.3 per cent increase, followed by electricity at 8.6 per cent and manufacturing at 2.6 per cent. For the April-June 2024 period, industrial growth stood at 5.2 per cent, compared to 4.7 per cent in the same period the previous year. As India navigates the delicate balance between growth and inflation, the coming months will be critical in shaping the country's economic trajectory, especially with potential global shifts in monetary policy and the evolving monsoon season.

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SBI report deciphers India's GDP surge and economic projections

ANI

Expect RBI to again pause repo rate in February policy meeting: SBI Research

ANI

SBI Eco Research forecasts Q3 FY24 GDP growth at 6.8% amid global complexities

ANI

India's rural-urban income gap declines sharply amid fall in poverty level: SBI Report

IANS

Credit growth in banks continues to exceed deposits, says new SBI report

ANI

SBI report says inflation will remain around 5 per cent this fiscal

ANI

India handled inflation much better than US, Germany and France: SBI Report

ANI

CPI inflation drops to lowest in five years but road ahead could be bumpy: SBI Report

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