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The <keyword id="20150760" type="General" weightage="20" keywordseo="SP-Global-Market-Intelligence" source="keywords" meta.keywordsubtype="org" meta.entityname="S&amp;P Global Market Intelligence" meta.hostid="261" meta.entityid="S&amp;P Global Market Intelligence">S&amp;P Global Market Intelligence</keyword> has upwardly revised <keyword id="22162557" type="General" weightage="100" keywordseo="GDP-forecasts" source="keywords">GDP forecasts</keyword> for <keyword id="19894886" type="General" weightage="20" keywordseo="China" source="keywords">China</keyword> in its latest report. But even with the revised forecast, China's GDP growth will be substantially lower than that of <keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword>. According to S&amp;P, India's GDP is projected to grow at a rate of 6.7 per cent in 2024 and 6.3 per cent in 2025. In contrast, China's <keyword id="19931030" type="General" weightage="20" keywordseo="economy" source="keywords">economy</keyword> is now forecasted to grow at 5.0 per cent in 2024 and forecast moderately raised to 4.6 per cent from 4.5 per cent. The agency revised China's estimate due to policy tailwinds expected to extend into next year and a gradual improvement in private-sector sentiment within the country. However, the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) in its monetary policy has raised the GDP forecast of India from 7 per cent to 7.2 per cent for FY25. RBI Governor Shaktikanta Das said, "The real GDP growth for the current financial year 2024-25 is projected at 7.2 per cent with Q1 at 7.3 per cent, Q2 at 7.2 per cent, Q3 at 7.3 per cent, and Q4 at 7.2 per cent. The risks are evenly balanced." RBI Governor further said that, "The GDP growth projection, we have increased it from 7 per cent to 7.2 per cent and the inflation projection, the average for the year, we have retained it at 4.5 per cent as it was in the last MPC meeting." The <keyword id="22162558" type="General" weightage="20" keywordseo="SP-Global-Market" source="keywords">S&amp;P Global Market</keyword> Intelligence however has lowered the growth forecasts of US, Canada, Brazil, and Japan for 2024, while it has revised upward the forecasts for China, the Eurozone, the UK, and Russia. Additionally, the <keyword id="22162559" type="General" weightage="20" keywordseo="global-growth-forecast" source="keywords">global growth forecast</keyword> for 2025 has edged up from 2.7 per cent to 2.8 per cent, with higher forecasts for some of the larger countries, including the US and China. Regarding Japan, the agency maintains that the next rate hike by the Bank of Japan is most likely to occur in October 2024, given the economic and inflationary headwinds. In the Asia-Pacific region, the agency predicts that real GDP growth, excluding mainland China and Japan, will remain broadly stable at 4.4 per cent in 2024 and 2025, driven by robust domestic demand and recovering exports. A pickup in overseas demand is seen as the key growth driver for the region in 2024.

S&P Global Market raised growth forecast of China, still significantly lower than India

Mumbai (Maharashtra) [India], November 17 (ANI): Reserve Bank of India Governor <keyword id="6359111" type="General" weightage="80" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> chaired meetings with Managing Directors and Chief Executive Officers of public sector banks and certain private sector banks on Wednesday. The meetings were also attended by Deputy Governor M. K. Jain along with a few senior officials of the RBI, the central bank said in a statement. Governor Das acknowledged the crucial role played by the commercial banks in supporting economic growth throughout the turbulent times since the outbreak of the pandemic and the ongoing financial market turmoil. Das further stated that despite challenges, the Indian banking sector has remained resilient and continued to improve in various performance parameters. "He advised the banks to remain watchful of the evolving macroeconomic situation, including global spillovers, and take mitigating measures proactively so that the potential impact on their balance sheets is minimised and financial stability risks are contained," the RBI statement said. Among other matters, issues relating to lagging growth in deposits vis-a-vis credit growth, asset quality, investments in IT infrastructure, adoption of new-age technology solutions, and functioning of Digital Banking Units were also discussed. (ANI)

'Remain watchful' is RBI Governor's advice to heads of banks amid global headwinds

With headline inflation beginning to show signs of easing, the domestic macroeconomic outlook appears to be resilient though it is still sensitive to global headwinds, an <keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword> article said on Friday. The article published in the latest RBI bulletin also said the outlook for the global <keyword id="34412" type="General" weightage="20" keywordseo="Economy" source="Orion">economy</keyword> remains clouded with downside risks. Global financial conditions have been tightening and deteriorating market liquidity is amplifying financial price movements. Markets are now pricing in moderate increases in policy rates and risk-on appetite has returned. In <keyword id="3658" type="General" weightage="20" keywordseo="india" source="Orion">India</keyword>, supply responses in the economy are gaining strength, it noted. "With headline inflation beginning to show signs of easing, the domestic macroeconomic outlook can best be characterised as resilient but sensitive to formidable global headwinds," the article said. <keyword id="6381428" type="General" weightage="50" keywordseo="urban" source="Orion">Urban</keyword> demand appears robust, while rural demand is muted but more recently picking up traction, it added. The article has been prepared by a team led by RBI Deputy Governor <keyword id="4207560" type="General" weightage="50" keywordseo="michael-debabrata-patra" source="Orion">Michael Debabrata Patra</keyword>. The RBI, however, said the opinions expressed in the article are those of the authors and do not represent the views of the central bank. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/rupee-slips-6-paise-to-close-at-81-70-against-us-dollar/articleshow/95604868.cms">Rupee slips 6 paise to close at 81.70 against US dollar</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/pakistans-total-debt-surges-to-rs-12-trillion-in-first-quarter/articleshow/95603384.cms">Pakistan's total debt surges to Rs 12 trillion in first quarter</a>

Economy resilient, but sensitive to global headwinds: RBI article

<ul><li>Overall sales increased by 14% over Q1 2022 across top 7 cities. </li><li>New launches in top 7 cities witnessed a 23% yearly rise. </li><li>Average residential property prices across the top 7 cities increase 6-9%. </li></ul>Despite global economic uncertainties, including layoffs by several large and small companies, the bull run in the Indian housing market continued in the January to March quarter 2023 (Q1 2023). According to the research data by real estate consultancy Anarock, quarterly housing sales are at an all-time high in the last decade, with approximately 1,13,770 units sold in Q1 2023 across the top 7 cities. This is a 14% yearly rise against approximately 99,550 units sold back in Q1 2022. NCR, MMR, Bengaluru, Pune, and Hyderabad together accounted for 89% sales in the quarter. Says Anuj Puri, Chairman, Anarock group, “The residential market’s winning streak continued in the first quarter of 2023 with housing sales in top cities breaching the previous high of Q1 2022. The quarter has recorded the highest ever sales in the last decade amid significant rise in demand for high-ticket priced homes (homes costing more than ₹1.5 crore). In spite of a high number of new launches in this and the previous quarter, the available inventory in the top 7 cities remained almost similar at about 6.27 lakh units by Q1 2023-end. On a sequential basis, unsold stock saw a 1% dip across the top 7 cities. Among the top cities, NCR saw the highest decline in its unsold stock in January to March quarter 2023 by 22%. “The housing sector is experiencing strong sales due to increased affordability over the years. We anticipate closing this fiscal year with the highest number of housing units sold, since our inception. Despite a rise in home loan interest rates, there has been minimal impact on demand nationwide. We anticipate that the demand in the housing sector will continue for at least a few more years,” said Pradeep Aggarwal, founder &amp; chairman, Signature Global (India), commenting on the Anarock report. Puri however added that persistent inflation concerns along with another possible rate hike by the RBI in the near future could dent the housing market’s growth trajectory in the upcoming two quarters. Average residential property prices across the top 7 cities increased in the range of 6-9% in Q1 2023 when compared to Q1 2022, mainly due to increase in the prices of construction raw materials and overall rise in demand. MMR and Bangalore recorded the highest 9% annual jump. New launches in top 7 cities witness a 23% yearly rise New launches across the top 7 cities also breached the one lakh mark and witnessed 23% yearly rise – from 89,140 units in Q1 2022 to over 1,09,570 units in Q1 2023. Interestingly, Mumbai Metropolitan Region (MMR) and Pune again saw the maximum new supply, accounting for 52% of the total new launches across the top 7 cities. Individually, the two cities saw 58% and 34% yearly increases in their new supply, respectively. MMR saw approximately 37,260 units launched in Q1 2023 – a significant increase of nearly 58% over Q1 2022. More than 62% new supply was added in the sub-₹80 lakh budget segment. On the other hand, Pune added a new supply of approximately 19,420 units in Q1 2023 compared to 14,490 units in Q1 2022 – an increase of 34%. · Chennai added approximately 6,410 units in Q1 2023, a yearly increase of a whopping 110% over Q1 2022. It was the only city to see three-digit growth in new supply. While Hyderabad added approximately 14,620 units in Q1 2023, a yearly decline of 32%, Bangalore added approximately. 13,560 units in Q1 2023, yearly increase of just 3%. NCR saw an increase of 34% in new launches against Q1 2022 with approximately 12,450 units launched in Q1 2023, while Kolkata added approximately 5,850 units in Q1 2023, an increase of 50% over Q1 2022. Approximately 70% new supply was added in the mid segment priced between ₹40 lakh-₹80 lakh.

Indian housing market stays strong despite global headwinds: Anarock Research

Reserve Bank of India on Friday lowered India's FY23 GDP growth projection to 7.2 per cent from an earlier estimation of 7.8 per cent. In a statement after the Monetary Policy Committee's bi-monthly meet, <keyword id="7268643" type="General" weightage="20" keywordseo="rbi-governor-shaktikanta-das" source="Orion">RBI Governor Shaktikanta Das</keyword> said the real GDP growth is projected at 16.2 per cent in Q1FY23, at 6.2 per cent in Q2; at 4.1 per cent in Q3 and Q4 at 4 per cent, assuming that crude oil (Indian basket) price is at $100 per barrel during 2022-23. "As the horizon was brightening up, escalating geopolitical tensions have cast a shadow on our economic outlook. Although India's direct trade exposure to countries at the epicentre of the conflict is limited, the war could potentially impede the economic recovery through elevated commodity prices and global spillover channels," he said. "Further, financial market volatility induced by monetary policy normalisation in advanced economies, renewed Covid-19 infections in some major countries with augmented supply-side disruptions and protracted shortages of critical inputs, such as semi- conductors and chips, pose downside risks to the outlook." Besides, the governor said that going forward, robust Rabi output should support recovery in the rural demand, while a pick-up in contact-intensive services should help in further strengthening urban demand. "Investment activity may gain traction with improving business confidence, pick up in bank credit, continuing support from government capex and congenial financial conditions." "'Capacity utilisation' (CU) in the manufacturing sector recovered further to 72.4 per cent in Q3:2021-22 from 68.3 per cent in the previous quarter, surpassing the pre-pandemic level of 69.9 per cent in Q4:2019-20." On Friday, the <keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>'s Monetary Policy Committee (MPC) of the central bank maintained the repo rate, or short-term lending rate, for commercial banks, at 4 per cent. In addition, the growth-oriented accommodative stance was also retained. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/science/health/news/one-in-three-women-have-no-knowledge-about-periods-before-their-first-menstruation/slidelist/90721792.cms">One in three women have no knowledge about periods before their first menstruation</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/enterprise/news/profit-margins-of-tcs-infosys-wipro-and-other-tech-companies-under-pressure-for-jan-mar-due-to-record-hiring-and-salary-hikes/articleshow/90719782.cms">Profit margins of IT companies must be under pressure for January-March quarter due to record hiring and salary hikes</a>

RBI lowers FY23 GDP growth forecast to 7.2% due to global headwinds

Mumbai, The <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords" meta.keywordsubtype="org" meta.entityname="RBI" meta.hostid="261" meta.entityid="RBI">RBI</keyword> expects the price of the Indian basket of <keyword id="20023856" type="General" weightage="20" keywordseo="crude-oil-imports" source="keywords">crude oil imports</keyword> to be around $85 per barrel going ahead amid geopolitical tensions which have "imparted significant uncertainty" to the outlook. India exports around 85 per cent of its crude requirement, and soaring oil prices which have often crossed the $90 a barrel mark in recent years, tend to drag down the economy. The RBI's monetary policy report released on Friday states that international crude prices exhibited sizeable two-way movements in the second half of 2023-24, falling in October-December 2023 to around $75 per barrel on slowing global demand amidst weak manufacturing activity and easing demand for transportation fuels as well as supply increases from non-OPEC countries. However, amidst intensifying hostilities in the <keyword id="19904316" type="General" weightage="20" keywordseo="middle-east" source="keywords">Middle East</keyword>, deep output cuts by OPEC plus cartel, and incidents of supply outages, international crude prices moved higher from mid-December reaching an average close to $85 per barrel in March, the report points out. "The spread between global petroleum product prices and crude prices eased from its recent peaks in mid-2022 but remains elevated by historical standards in view of demand-supply refinery mismatches. Taking into account these factors, the baseline assumption for the crude price (Indian basket) is retained at $85 per barrel," the report states. Regarding the outlook for the rupee, the report states that the nominal exchange rate of the Indian currency saw two-way movements in the range of Rs 82.8-83.4 per US dollar in the second half of 2023-24. Taking into consideration the uncertainty around US dollar movements, the ebbs and flows of global capital flows and international crude oil prices, the baseline assumption for the exchange rate is revised to Rs 83 per US dollar. It also sees as a positive factor in the global growth forecast for 2024 being revised upwards by 20 bps to 3.1 per cent by the <keyword id="19916590" type="General" weightage="20" keywordseo="international-monetary-fund" source="keywords">International Monetary Fund</keyword> (IMF) in its January 2024 update of the <keyword id="20389978" type="General" weightage="20" keywordseo="world-economic-outlook" source="keywords">World Economic Outlook</keyword> (WEO) from its October 2023 projection. Global economic growth is expected to increase marginally to 3.2 per cent in 2025 and global trade growth (goods and services combined) is projected to accelerate from 0.4 per cent in 2023 to 3.3 per cent in 2024 and further to 3.6 per cent in 2025. However, the headwinds from protracted geopolitical tensions and increasing disruptions in trade routes pose risks to India's growth outlook, according to the report. Taking all these factors into consideration, India's real GDP growth for 2024-25, is projected at 7.0 per cent, with Q1 at 7.1 per cent; Q2 at 6.9 per cent; Q3 at 7.0 per cent; and Q4 also at 7.0 per cent. The risks are evenly balanced, the report adds.

RBI sees price of India's crude oil imports at $85 a barrel in FY25

<ul><li>FDs are seeing a higher traction now that crypto and the <keyword id="6357440" type="General" weightage="20" keywordseo="stock-market" source="Orion">stock market</keyword> are volatile.</li><li>Bitcoin hit an 18-month-low point last month as the price dipped below $20,000.</li><li>As other investment avenues remain choppy, money is chasing safer options to live <keyword id="6377620" type="General" weightage="20" keywordseo="fixed-deposits" source="Orion">fixed deposits</keyword>.</li></ul>Not very long ago millennials investors were taking a dig at ‘baby boomers’ for keeping fixed deposits (FDs) on a pedestal. After all, crypto and stock investments offered stellar returns. But the tables seem to have turned now that the cryptocurrency has been plunging for quite some time, causing losses to many investors. Bitcoin — the world’s largest cryptocurrency — hit an 18-month-low last month as the price dipped below $20,000. The currency was priced at $22,287.10 on July 18 versus an all-time high of $68,000 it reached in November 2021. <div type="image" title="Fixed deposits back in vogue as crypto, stock market get hit by global headwinds" msid="92983745" hostid="261" sizebytes="369340"></div> Siddhartha Bhaiya, managing director and fund manager of Aequitas Investment Consultancy, also <a href="https://twitter.com/sidd1307/status/1455792585251852289?s=20&amp;t=s8Hgr273cjKrGhrFeUx29w">took a jibe</a> at the current situation, saying “Crypto holders are future fixed deposit holders.” Not sure about cryptocurrency investors, but banks and non-banking financial companies (NBFCs) have started seeing more interest in fixed income products like the FDs. <cmsannotation type="cmsannotation" annotationid="Fixed deposits are getting an edge" comment="subhead" text="Fixed deposits are getting an edge">Fixed deposits are getting an edge</cmsannotation> Rachit Chawla, founder and CEO of Finway Capital, told Business Insider that the FDs are seeing a higher traction now that crypto and the stock market is underperforming. He noted that crypto and equity asset classes are currently on a downward trend after hitting an all-time high only a few months ago, and this has made the investors more skeptical about its future. “They all are hoping and visualizing that there may be further corrections in all the asset classes. Hence, they have split their investments into fixed deposits also. So in case it [market] goes further down they can utilise the same amount of capital [they invested in FDs] and reinvest in equity,” he explained. He also noted that the investors who did not pull out their capital from crypto and equity markets at the right time have already taken a hit and want to avoid any further loss. “Basically when greed is there, people actually jump on. People think that it [markets] will continue to go up… But now people are being a little conservative. Hence, the rise in fixed deposits,” he noted. Chawla also noted that this is not a new phenomenon. “Whenever equities crash, generally there is a rise in fixed deposits because people become a bit conservative,” he added. <cmsannotation type="cmsannotation" annotationid="But it is not a full proof strategy either" comment="subhead" text="But it is not a full proof strategy either">But it is not a full proof strategy either</cmsannotation> Fixed deposits are not wealth maximizing products. Even though Axis Bank, SBI, IDBI Bank, DBS Bank, Citibank and Canara Bank, to name a few, have increased their fixed deposit rates, the customers are still losing money without realising as inflation is growing at a much higher pace. The value of the capital being invested in fixed deposits is also being eroded because of the high inflation rate, Chawla added. <div type="image" title="Fixed deposits back in vogue as crypto, stock market get hit by global headwinds" msid="92983767" hostid="261" sizebytes="117140"></div> “The only time you should move out of equities and start parking funds in FDs is when you are nearing your financial objective or goal. Further, taking out money from equities at this point when many investors are looking to participate more in equities here onwards may not be a prudent strategy," Harshad Chetanwala, investment adviser and co-founder of MyWealthGrowth, said. <cmsannotation type="cmsannotation" annotationid="But crypto is not all well either" comment="subhead" text="But crypto is not all well either">But crypto is not all well either</cmsannotation> Well no one knew that Nirmala Sitharaman would come out with a rug-pulling revelation only a month later that the Reserve Bank of India (RBI) wants the <a href="https://www.businessinsider.in/cryptocurrency/news/rbi-seeks-a-crypto-ban-but-it-needs-global-collaboration-says-nirmala-sitharaman/articleshow/92954958.cms">government to “regulate” and “prohibit” crypto </a>in India. Not that crypto was doing any better before this. A survey by Indian crypto exchange WazirX revealed that four in five traders have slowed down their investments in cryptocurrency since the implementation of a new tax. The company’s survey — involving 9,500 respondents — found that one in five crypto traders are considering shifting their trading activities to international exchanges. After all, all profits from crypto are currently taxed at <a href="https://www.businessinsider.in/budget/news/from-cryptocurrencies-to-nfts-india-to-tax-all-virtual-digital-assets-at-30/articleshow/89268587.cms">a flat 30% rate</a>, which is the highest tax bracket and the same rate as lottery winnings. The government also mandated a 1% tax deducted at source (TDS) on all crypto transaction redemptions, even the ones that make a loss. So, for example, a person who buys a crypto asset at ₹10,000 and sells it at ₹12,000 would show a profit of ₹ 2,000 and pay 30% tax, which is ₹600. In terms of TDS, if you had bought Bitcoin worth ₹10,000 and sold it at the same price without any profit, you would get back only ₹9,900. SEE ALSO <a class="tout-title-link" href="https://www.businessinsider.in/business/corporates/news/tcs-infosys-wipro-salary-in-2022-at-3-lakh-crore/articleshow/92957422.cms">IT biggies spent 62% of revenues on wages in FY22, salary bill at ₹3 lakh crore</a> <a href="https://www.businessinsider.in/business/startups/news/if-musk-goes-to-mars-well-deliver-diesel-there-too-says-this-ratan-tata-backed-startup-founder/articleshow/92973971.cms">If Musk goes to Mars, we’ll deliver diesel there too says this Ratan Tata-backed startup founder</a> <a href="https://www.businessinsider.in/cryptocurrency/news/rbi-seeks-a-crypto-ban-but-it-needs-global-collaboration-says-nirmala-sitharaman/articleshow/92954958.cms">RBI seeks a crypto ban but it needs global collaboration, says Nirmala Sitharaman</a>

Fixed deposits back in vogue as crypto, stock market get hit by global headwinds

Mumbai, <keyword id="192432" type="General" weightage="20" keywordseo="reserve-bank-governor" source="Orion">Reserve Bank Governor</keyword> <keyword id="6359111" type="General" weightage="20" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> on Thursday said India is one of the fastest growing major economies in the world with a rising potential growth profile, and stressed that the central bank remains committed to act early and decisively to prevent any build-up of risks. In his foreword to the <keyword id="19899808" type="General" weightage="80" keywordseo="rbi" source="keywords">RBI</keyword>'s 28th issue of the <keyword id="19984045" type="General" weightage="50" keywordseo="financial-stability-report" source="keywords">Financial Stability Report</keyword> (FSR), Das said achieving durable price stability, ensuring medium-term debt sustainability, further strengthening financial sector resilience, creating new growth opportunities and promoting inclusive and green growth remain key policy priorities. The FSR reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability and the resilience of the Indian financial system. Observing that the global economy is facing multiple challenges, Das said the Indian economy exhibits macroeconomic resilience, with a robust financial system that is supporting its growth dynamics. "We remain alert and committed to act early and decisively to prevent any build-up of risks," he said. He also said that recent macroprudential measures taken by the central bank to curb lenders' exuberance towards certain segments of retail loans underline its commitment to preserve financial stability without compromising availability of funds for productive requirements of the economy. "India is one of the fastest growing major economies in the world with a rising potential growth profile," the governor said, and added the sharp rebound in growth is underpinned by sound macroeconomic fundamentals, robust domestic demand and prudent public policies. Even as India confronts global headwinds and emerging challenges from technological disruptions, cyber risks and climate change, he said RBI's endeavour will be to continue to fortify the financial system, promote responsible innovation and invigorate inclusive growth. The <keyword id="19922074" type="General" weightage="80" keywordseo="reserve-bank" source="keywords">Reserve Bank</keyword> and the other financial regulators remain invested in preserving financial stability and fostering a financial system that is resilient to shocks and supportive of growth, he added.

RBI to act early to prevent any risk to India's fastest growth potential: Guv Shaktikanta Das

<ul><li>Manufacturing, mining and services sectors contributed to <keyword id="44910" type="General" weightage="20" keywordseo="gdp-growth" source="Orion">GDP growth</keyword> in Q2.</li><li>The GVA in the manufacturing sector showed a growth of 13.9% in the second quarter.</li><li>The output of eight key infrastructure sectors jumped 12.1% in October 2023. </li></ul>India's economy grew 7.6% in the September quarter of this fiscal and remained the fastest-growing large economy, mainly due to better performance by manufacturing, mining and services sectors, the government data showed on Thursday. The gross domestic product (GDP) expanded by 6.2% in the July-September quarter of 2022-23. India remained the fastest-growing major economy, as China posted a 4.9% growth in July-September 2023. “The 7.6% GDP growth in the September quarter has far exceeded the RBI’s 6.5% estimate for the period, ensuring that India remains on the growth path despite multiple global headwinds arising from economic and geo-political uncertainties,” said Vivek Rathi, National Director Research, Knight Frank India. Manufacturing picks up pace, agriculture slows The gross value added (GVA) in the manufacturing sector showed a growth of 13.9% in the second quarter of the current fiscal compared to a contraction of 3.8% in the year-ago period. “Manufacturing and construction were the clear leaders with growth of 13.9% and 13% respectively. In the case of manufacturing, high profit growth contributed to the buoyancy while construction was up due to housing as well as government capex,” said Madan Sabnavis, chief economist at Bank of Baroda. As per the data, the output (GVA) in the 'mining and quarrying' accelerated to 10% in the second quarter against a contraction of 0.1% a year ago. Electricity, gas, water supply and other utility services' grew by 10.1% from 6.1%. “Double digit growth in the industry sector, especially in manufacturing and construction is suggesting that businesses ramped up production to meet the pent-up demand just before the festivals,” said Rumki Majumdar, Economist, Deloitte India. According to the <keyword id="7734679" type="General" weightage="50" keywordseo="national-statistical-office" source="Orion">National Statistical Office</keyword> (NSO) data, the agriculture sector GVA growth decelerated to 1.2% in the September 2023 quarter from 2.5% a year ago. This was expected due to seasonal effect, say economists. The construction sector recorded a growth of 13.3% year-on-year in the second quarter compared to 5.7%. The expansion in financial, real estate and professional services' GVA was 6%, down from 7.1% in the year-ago quarter. “As a derived demand, the upturn in the capex cycle and the strengthening domestic profile of consumers should prove to be strong drivers of India's real estate market. The continuation of the real estate upcycles, coupled with the increased focus on infrastructure development will support the sustained growth of the construction sector,” said Rathi. Meanwhile, the output of eight key infrastructure sectors jumped 12.1% in October 2023 against 0.7% expansion in the year-ago period on account of a sharp uptick in production of coal, steel, cement and electricity, according to the official data. The government's fiscal deficit at the end of October touched 45% of the full-year budget estimate, according to data released by the Controller General of Accounts (CGA) on Thursday. “Personal consumption growth lost momentum and grew only 3.1% YoY. However, it could be a possibility that consumers postponed their spending for the upcoming festive months and may have reallocated funds for investments. Higher consumer spending may get reflected in the October-December quarter,” said Majumdar. (With PTI inputs)

India's GDP grows 7.6% in September quarter, beats RBI estimates

<ul><li>India’s inflation outlook has changed in the last few months due to rising vegetable prices along with a few pulses and grains.</li><li>While MPC is expected to increase its inflation projections it might not rush into a rate hike in August, economists say.</li><li>While central banks of developed economies are still hiking interest rates, developed economies are actively decoupling. </li></ul>Even those who aren’t keeping a keen eye on inflation would have noticed the surge in food prices in the last few months and their effect on Indian household budgets. However, economists believe that in the upcoming August meeting, <keyword id="30067" type="General" weightage="80" keywordseo="rbi" source="Orion">RBI</keyword>’s Monetary Policy Committee (MPC) is likely to keep base interest rates unchanged. In the last few months, there have been many inflation shocks, especially with regards to rising tomato prices along with that of a few pulses and grains. According to a report by Crisil, the cost of a vegetarian thali went up by 28% and non-vegetarian thalis went up by 11% in July, as compared to June. “Over the past month, surging food prices have changed India’s inflation outlook. While vegetable prices should eventually cool, pulse and cereal prices could prove stickier. We now expect headline inflation to rise to 6-6.5% in July/August, from 4.8% in June, before settling in a 5-6% range for the rest of FY24,” said Nomura. ‘Policy settings on hold’ Though prices are skyrocketing, most economists believe that the food inflation is transitory or seasonal. Moreso, core inflation has been steady and wholesale price inflation too has been cooling off, providing comfort. All these factors indicate that the MPC will keep interest rates paused like it did in the last two meetings. “We expect the MPC to keep the repo rate unchanged at 6.5% at the 10 August meeting, flagging resilient economic growth, and anchored underlying inflation as reasons to monitor incoming economic data, while keeping policy settings on hold,” said Rahul Bajoria, MD &amp; head of EM Asia (ex-China) economics at Barclays. The RBI may not want to hurry to cut rates, says Deepak Jasani, head of retail research at HDFC Securities. “Inflation could remain elevated in July and August and if the El Nino pattern plays out in the latter half of the monsoon, this era of high inflation could continue till the end of this calendar. Oil prices globally have also started to inch up. However, we do not expect the RBI to jump the gun and resume rate hikes in its August meeting,” he added. The MPC is also expected to maintain its status quo on its "withdrawal of accommodation" stance as well. However, economists do expect the RBI to alter its inflation projections for the year, while keeping growth projections intact. “There are no new major headwinds to growth projections. Stronger than expected momentum in domestic investments resulted in major international agencies like IMF revising up India's growth projections to 6.1% from 5.9% earlier this year. We expect RBI to maintain its growth projections at 6.5% for FY24,” said a report by CARE Edge. Mixed messages from global markets While most nations across the globe had started increasing interest rates around May last year to tackle the global inflation problem — they have been coming off it in a varied manner. The world’s largest economy, the US, seems to be in the midst of more interest rate hikes. The US Fed hiked its policy rate by 25 bps last month, and experts expect a few more going ahead. The Bank of England and European Central Bank are still hiking policy rates but a few central banks of emerging markets like China and Brazil have already started their rate-cutting journey. “Recent developments show early signs of a monetary policy decoupling globally influenced by different macroeconomic conditions,” says CARE Edge. India however can go either way as the RBI Governor <keyword id="6359111" type="General" weightage="50" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> has repeatedly said that it was a pause not a pivot in the earlier MPC meeting outcome. Most economists in India too had hoped for rate cuts in the <a href="https://www.businessinsider.in/finance/news/with-inflation-cooling-rbi-may-slash-interest-rates-by-50-bps-this-financial-year/articleshow/100531780.cms">second half of the current financial year</a>, but quickly tempered their hopes after the change in inflation dynamics. Along with a stable currency, large FPI inflows and narrowing trade deficit there are uncertainties like an erratic monsoon and El Nino conditions which may yet play out. In such a scenario, the Shaktikanta Das led panel will have to balance the growth momentum and yet stick to its mandated inflation watch. Tricky, to say the least. MPC decisions in 2023 <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Meeting </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Base rates </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">June meet </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Rates kept unchanged </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">April meet </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Rates kept unchanged </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">February meet </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Rates hikes by 25 basis points to 6.5% </td></tr></tbody></table>

RBI MPC expected to ‘pause and watch’ how inflation plays out

<ul><li>The <keyword id="6369693" type="General" weightage="20" keywordseo="mpc" source="Orion">MPC</keyword> has unanimously decided to keep the rates unchanged.</li><li>The central bank paused its rate hike cycle in February this year.</li><li>Economists expected MPC to stay with the ‘pause’ on interest rates, with fresh risks to inflation. GDP growth projection retained at 6.5%. </li></ul>The Reserve Bank of India’s (<keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>) rate setting panel kept the policy <keyword id="43352" type="General" weightage="20" keywordseo="repo-rate" source="Orion">repo rate</keyword> unchanged at 6.5% on Friday. The <keyword id="6357126" type="General" weightage="20" keywordseo="monetary-policy" source="Orion">Monetary Policy</keyword> Committee (MPC) has unanimously decided to keep the rates unchanged in the October meeting. There is no change in its stance either - it is retained at withdrawal of accommodation. The central bank also announced that it was withdrawing its incremental cash reserve ratio (ICRR), which was introduced in August to withdraw surplus liquidity from the system. “It’s a status quo policy but there are many aspects that I will spell out which will reveal our approach to the global headwinds,” said Shaktikanta Das, governor of RBI. This is the fifth time that the MPC has kept policy rates unchanged since February. The MPC has remained focussed on withdrawal of accommodation. “India is poised to be the growth engine of the world. Need of the hour is to remain vigilant. High inflation is a major risk and MPC is focussed on aligning it to the 4% target,” Das added. The RBI projects India’s GDP to grow at 6.5% in FY24. CPI inflation is projected to be at 5.4% for the financial year, which remains unchanged. The Reserve Bank of India’s rate setting panel was expected to stay with the ‘pause’ on interest rates, as fresh risks have emerged to inflation. The central bank has paused its rate hike cycle in February this year. In August, India's retail inflation moderated to 6.8% from a high of 7.4% in July. The lower inflation print was due to a fall in the prices of vegetables after they went through the roof in July on patchy rains in some parts of the country. Just as it seemed that inflation was cooling in August, 30% higher crude oil prices and a stronger dollar will have worsened the outlook for inflation in the future. Higher crude prices have a cascading effect on goods that need to be transported. Economists expect September’s inflation data to remain above the RBI’s upper tolerance band. CareEdge Ratings expects the RBI to miss its Q2 inflation projections by nearly 60 basis points and will consequently revise its whole-year projection to 5.6% from an earlier projection of 5.4%. Even though the risks to inflation remain elevated, the MPC was expected to hike rates as many other central banks have done in the last few months. However, in the face of rising global bond yields, ever strengthening dollar index and higher crude oil prices, debt market experts expect RBI to continue with 'withdrawal of accommodation'”policy stance. Systemic liquidity will be tightened further in the second half. The market did not, therefore, expect RBI to take any permanent liquidity withdrawal measures. Systemic liquidity, which had been in surplus at ₹2.1 trillion during the August MPC meeting, transitioned into a deficit of ₹1.5 trillion by 27 September. This shift has increased money market rates, with the overnight call money rate rising from 6.4% to 6.8%. The RBI announced that it would implement an incremental cash reserve ratio (I-CRR) in its August MPC meeting, which sucked out liquidity to the tune of ₹1.1 trillion from the banking system. Despite the gradual withdrawal of the I-CRR, systemic liquidity continued to stay in the deficit since mid-September due to quarterly tax outflows. The central bank’s interventions in the foreign exchange market have marginally contributed to some absorption of rupee liquidity. The RBI was also expected to retain the GDP forecast for the full financial year at 6.5% as headwinds have not yet settled. The central bank will wait to see data emerging after the festive season and output from the kharif season before changing forecast again.

RBI’s MPC maintains status quo, keeps repo rate unchanged

<ul><li><keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>’s pause could be a prolonged one as the path of monetary policy remains fraught with risks. </li><li>Surprise rate hikes by the Bank of Australia and Bank of Canada in June, after a pause suggests central banks are not yet done with the hike cycle. </li><li>Market expects RBI to review its stance again in August, if monsoon is normal and risks to commodity prices abate. </li></ul>The road ahead for monetary policy continues to remain fraught with risks. As expected, the rate setting committee of the Reserve Bank of India held on to benchmark rates yet again at its June review, but there is no change in its stance. The Reserve Bank of India <keyword id="6375120" type="General" weightage="20" keywordseo="monetary-policy-committee" source="Orion">Monetary Policy Committee</keyword> retained the <keyword id="43352" type="General" weightage="20" keywordseo="repo-rate" source="Orion">repo rate</keyword>, or the lending rate of the central bank, at 6.5%, but this is not a pivot. This is the second straight policy in which rate has been held showing that the rate hike cycle may have peaked for now. Markets were penciling in a rate cut towards the end of this year, as the inflation print in April came in at 4.7%. “Being in the inflation tolerance band is not enough. Our goal is to bring inflation to 4%,” <keyword id="64190" type="General" weightage="20" keywordseo="rbi-governor" source="Orion">RBI Governor</keyword> Shaktikanta Das said on Thursday. Fixed income experts and economists believe that all expectations of a rate cut are off the table for now, as risks to both growth and inflation remain elevated. Economists were unanimous in their expectations ahead of the policy statement on a pause. However, the surprise rate hikes announced by the Bank of Australia and Bank of Canada in June have spooked markets. Bank of Australia too has hiked rates in June to 4.1% this month while Bank of Canada benchmark hiked rates to 4.75% hours before RBI’s announcement. Economists are of the view that the RBI too is keeping the door open for further hikes, given that risks to inflation are not yet over. It is noteworthy that the pause in rate hike comes after the benchmark rate was hiked by 250 basis points since May 2022 and a breather was only taken in the April policy this year. Like many other developed economies, the central bank’s prolonged pause is now a certainty. Rate Cut Hopes Delayed Further Even though RBI has lowered its inflation projection for FY24 at 5.1% from the earlier estimates of 5.2%, the risks are still elevated. “We will keep Arjuna’s eye on inflation,” said Das. He added, “MPC will remain vigilant and will take further policy action as and when required to keep inflation expectations anchored and bring inflation down to 4%” Economists are interpreting this as a prolonged pause. Says Lakshmi Iyer, CEO-Investment &amp; Strategy, Kotak Investment Advisors, “Given global macro headwinds still visible, the members did not feel appropriate to change their stance. It looks like the market wait for rate cuts just got longer, as we saw Canada policy makers announce a surprise rate hike. Key incoming data dependency will continue to be the order of the day. Policy maker guard rails remain. Bonds may continue its sideways movement and continue to track global bond yields specifically US treasuries.” India may be in a sweet spot, but since global central banks are still hawkish and clearly not done with the hikes, RBI has chosen to retain the pause for now. Economists expect that the MPC will take a call in August 2023, the RBI will have enough data on El Nino and its potential impact on inflation before it decides on any rate cut. BY August, the Fed funds there will be clarity on the path of the US Fed’s fund rate too. If both these factors remain benign, then the <keyword id="3929464" type="General" weightage="20" keywordseo="rbi-mpc" source="Orion">RBI MPC</keyword> could look at changing its stance to “neutral” in August. Market participants are unanimous on the possibility of a prolonged pause. Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS, expects an extended pause on interest rates from the regulator in the near future. While the inflation is expected to hover above the tolerance limit in FY24, the RBI has marginally reduced its inflation forecast to 5.1% vs 5.2% in the previous policy. Growth And Inflation Are Evenly Balanced For Now India’s economy exited FY23 with GDP growth of 7.2%, which was better than estimates. This combined with retail inflation dipping to an 18-month low, both growth and inflation appear to be evenly balanced. While rural demand continues to be weak, the recent hikes in MSP and normal monsoon could come to the rescue. However, there still may be some spillover risks to inflation. Keeping the risks in mind, the RBI has kept its growth projection for the current financial year (FY24) unchanged at 6.5%. This comes at the backdrop of the World Bank revising India’s GDP forecast downwards by 30 bps earlier in the week. The Indian economy and financial sector stand out as strong and resilient, and domestic macroeconomic fundamentals are strengthening. Rural demand is on a revival path,” said Das adding, “GDP growth in 2022-23 turned out to be stronger than anticipated and is holding up well. Highlights financial stability concerns, impact of rate hikes.”

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