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Economy - News & Views
Our Opinion

 April 04, 2014

RBI's present stand expected; hawkish stance a worry-...As expected, the RBI kept key policy rates unchanged in the central bank’s first bi-monthly monetary policy announcement. RBI retained the repo rate, the rate at which it provides overnight funds to banks, at 8 per cent. The CRR, which determines the amount of cash that banks have to park with the RBI, has also been left unchanged at 4 per cent of deposits. The RBI has reduced the quantum of overnight funds that banks can borrow from it, while commensurately expanding their access to term money of seven and 14 days duration; the main objective of this move being to improve the transmission of monetary policy impulses across he interest-rate spectrum.

 March 17, 2013

A Responsible Budget within a Restricted Space albeit some Worries on the Expenditure-Revenue Math...The Indian Union Budget for fiscal year 2013-14 has been termed as a responsible budget under difficult circumstances, but a disappointment to those who were expecting extraordinary measures to jump-start the economy. Fiscal deficit in the current financial year has been contained to 5.2 per cent of GDP; this averts any immediate crisis in terms of a sovereign rating downgrade, but has led to a decade low quarterly GDP of 4.5% in the final quarter of 2012, with plan expenditure meant for developmental projects slashed by over rupees 90 thousand crore. With very little room for fiscal stimulus, the Budget has concentrated on infrastructure development and inclusive growth, the most demanding issues at present. Pressing issues like stimulating domestic savings and channeling those to the capital market have also been addressed within the Budget.

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October 2013 issue as a sample copy

News - Indian Economy News - Global Economy

RBI keeps repo rate unchanged, reduces SLR and ECR

 RBI kept the policy repo rate unchanged at 8.0%; consequently, the reverse repo rate under the LAF will remain unchanged at 7.0%, and the MSF rate and the Bank Rate at 9.0%.  While holding the CRR unchanged at 4.0% RBI has reduced the SLR of SCBs by 50 basis points from 23.0% to 22.5% of their NDTL with effect from the fortnight beginning June 14. The RBI has also reduced the liquidity provided under the export credit refinance (ECR) facility from 50% of eligible export credit outstanding to 32% with immediate effect. However, it has introduced a special term repo facility of 0.25% of NDTL to compensate fully for the reduction in access to liquidity under the ECR with immediate effect. The apex bank has also decided to continue to provide liquidity under 7-day and 14-day term repos of up to 0.75% of NDTL of the banking system.

GDP remains subdued at 4.7% in 2013-14

India's economic growth remained below the 5% mark for the second year in a row at 4.7% in 2013-14, after a gap of almost 25 years. . Growth remained subdued at 4.6% in the fourth quarter of 2013-14 and during the entire fiscal, mainly due to a decline in manufacturing and mining output. The manufacturing sector declined 1.4% in the fourth quarter as against growth of 3% a year ago and contracted 0.7% in the financial year compared to a growth of 1.1% in 2012-13. The construction sector expanded 0.7% in the final quarter as against 2.4% in the year-ago. During 2013-14, the sector grew 1.6% compared with 1.1% in 2012-13.Mining and quarrying contracted 0.4% in the January-March quarter as against a decline of 4.8% in the same period of 2012-13. During 2013-14, the sector's output shrank 1.4% compared with a 2.2% dip in production in 2012-13. Agriculture sector output expanded a stellar 6.3% in January-March compared with 1.6% growth in the same period of 2012-13, pulling up growth to 4.7% for fiscal 2013-14 compared with 1.4% in the previous fiscal. Per capita net national income in real terms (at 2004-05 prices) in 2013-14 is estimated to have attained a level of Rs 39,904 compared with Rs 38,856 in 2012-13with 2.7% growth during 2013-14 against 2.1% during 2012-13. GFCF, a barometer of investment at current prices, is estimated at Rs 32.11 lakh crore in 2013-14 as against Rs 30.72 lakh crore in 2012-13. The services sector, including financing, insurance and real estate, expanded 12.4% in the final quarter as against 11.2% a year earlier. The segment grew a robust 12.9% in 2013-14 compared with 10.9% in the previous financial year.

Balance of Payment more than doubles to $7 billion in March quarter

India’s BoP rose sharply to $7.057 billion in the fourth quarter of 2013-14 from $2.68 billion in the same period in 2012-13. The current account deficit narrowed sharply to $1.2 billion or 0.2% of GDP in Q4 of FY14 from $18.1 billion or 3.6% of GDP a year ago and $4.2 billion or 0.9% of GDP in the December quarter. The lower CAD was primarily on account of a decline in the trade deficit as decline in imports was sharper than that in exports. Exports declined by 1.3% to $83.7 billion in Q4 FY14 as against an increase of 5.9% in same period last year, while trade deficit, on BoP basis, contracted by about 33% to $30.7 billion in Q4 from $45.6 billion in the corresponding quarter a year ago. However, BoP has shrunk from $19.103 billion in the December quarter due to a massive easing in the capital account in the period.   Total capital account moderated to $9.195 billion in the March quarter from $23.787 billion in the December quarter.  For the full fiscal year 2014, the BoP stood at $15.459 billion up from $3.83 billion in FY13. Current account deficit narrowed to 1.7% of GDP, or $32.4 billion, from 4.7%, or $87.8 billion in the previous fiscal, as a result of contraction in the trade deficit, coupled with a rise in net invisible receipts. foreign exchange reserves increased by $15.5 billion in FY14 as compared with $3.8 billion in FY13

INR appreciates 5.3% YTD

Boosted by capital inflows and euphoria around the incoming government, rupee’s surge to 11-month high levels has made it the best performing currency in Asia-Pacific region against the US dollar so far in 2014, with a gain of about 5.3% since the start of this year. The rupee, which closed at 58.52 levels against the US dollar in the last week of May, stood at Rs 61.80 level per US dollar at the start of 2014 and has recorded a gain of Rs 3.27 in less than six months, partly helped by robust foreign fund inflows. This marks a major turnaround since August last year, when rupee touched its life-time low of 68.80. India has, so far this year, received the lion's share of foreign investor interest in Asian equities outside Japan, according to a HSBC report.

Foreign institutional investors pumped $18.8bn (£11.2bn, €13.8bn) in Asian equities between 1 January and 26 May, of which $7.8bn found its way into the Indian markets. The ushering in of a stable government in the federal elections has revived sentiments and lifted investor confidence which could pave the way for growth. 

Global EconomyAccording to the IMF global growth is projected to strengthen to 3.6% in 2014 from 3.0% in 2013. Growth in advanced economies is expected to pickup from 1.3% in 2013 to 2.2% in 2014, while EME growth is expected to go up marginally from 4.7% in 2013 to 4.9% in 2014. The BRIICS (Brazil, China, India, Indonesia, Russia and South Africa) are projected to see GDP growth of 5.3% this year on average and 5.7% in 2015. China will again have the fastest growth among these countries, with rates just below 7.5% in 2014. Some moderation in ongoing fiscal adjustments is expected to further strengthen domestic demand in advanced economies and contribute to expansion in trade. According to the J.P. Morgan Global Manufacturing PMI the upturn in the global manufacturing sector lost some traction at the end of the first quarter of 2014, mainly because of a slowdown in Asia, while growth of total new orders also eased slightly, despite improved inflows of new export business. At 52.4 in March, down from 53.2 in February, the PMI was at a five-month low, but remained above its average for the current 16-month sequence of expansion.

OECD GDP growth across the 34-member OECD is projected to accelerate to 2.2% in 2014 and the world economy to grow at a 3.4% rate in 2014.  The OECD CLI, which is designed to anticipate turning points in economic activity relative to trend, indicates stable growth momentum for the OECD as a group. CLIs, however, point to weakening growth in major emerging economies.For the US and Japan CLIs point to stable growth momentum, while for the UK, the CLI indicates that growth momentum is stabilising at above-trend rates. In the Euro Area as a whole, and in Italy, CLIs indicate a continued positive change in momentum, while growth momentum is also indicated to remain stable in Germany and France. CLIs, however, point to below trend growth in Brazil, China and India, and a loss of momentum in Russia.

U.S. Industrial production unexpectedly fell 0.6% in April following strong gains of 0.9% and 1.1% in March and February, respectively. The decline in industrial production was largely the result of a 5.3% fall in utility output from elevated levels in the prior months, when unusually cold weather had caused a spike in demand for heating. Payroll employment increased by 288,000 in April as private payrolls rose by 273,000, with broad-based gains across industries. The unemployment rate fell by 0.4 percentage point to 6.3%. Housing starts went up to 1.072 million units in April with a sharp gain of 13.2% m/m in multifamily units, while single-family units increased 0.8%. Housing starts in April are 26.4% above their year-ago pace. The consumer price index rose 0.3% in April, easily the strongest gain in almost a year. A jump in gasoline prices and the sustained rally in food prices drove the headline gains. The core CPI again rose a healthy 0.2% on broad gains across several prominent categories. The US, is projected to grow by 2.6% in 2014 with support from accommodative monetary conditions

Euro Area Euro area growth shrank by 0.5% in 2013, even as GDP rose 0.2% (qoq) in the final quarter of 2013 following a rise of 0.1% and 0.3% in the previous two quarters. The euro area will see a return of positive growth after three years of contraction growing 1.2% in 2014. The Markit manufacturing PMI rose slightly to 53.4 in April from 53 in March and continued to indicate robust expansion. The economic sentiment index rose in May to its highest in more than two years and was above its long-term average for the sixth consecutive month. Consumer price growth accelerated to 0.7% y/y in April from 0.5% in the previous month, however, the inflation rate remains less than half the ECB’s target. The Euro area-wide general government budget deficit is estimated to have declined from 3.7% of GDP in 2012 to 3.0% in 2013. . German GDP expanded 0.8% q/q in the first quarter of 2014 after a 0.4% increase in the previous one. UK GDP rose 0.8% q/q or 3.1% y/y in the first quarter of 2014. Industrial production slipped 0.1% m/m but rose 2.3% y/y in March, while manufacturing reported a robust 0.5% m/m and 3.3% y/y increase.

Japan In Japan, growth will be dented by the launch of much-needed fiscal consolidation measures, and is expected to hover at 1.2% in 2014. Household spending in April fell at the fastest rate in three years in a sign that consumption could be slow to recover from an increase in the nationwide sales tax, raising questions over the pace of economic recovery. Industrial production fell more than expected in April as companies cut output to avoid a pile up in inventories in the lull after the sales tax hike took effect.

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Economy - Indicators

Indian Economy

5.70% - Q1, 2014-15
4.70% - 2013-14
4.50% -


Revised All-India IIP
0.5% (July, 2014)
-0.2% (December, 2013)
-1.3% (November, 2013)
#:Base 2004-05=100

WPI Inflation(%)

All Commodty:2.38%(Sep. 2014)
All Commodty:
3.74% (Aug, 2014)
All Commodty:5.19% (July,2014)

CPI Inflation(%)
7.80% (All India); 8.35% (Rural Areas); 7.04% (Urban Areas)
(August, 2014)
Interest Rates
CRR: 4.00% p.a (wef  9 February, 2013)
MSF Rate: 9.00% p.a. (wef 28 Jan, 2014)

Reverse Repo Rate: 7.00%
(wef  28 Jan, 2014)
Repo Rate: 8.00%
(wef  28 Jan, 2014)
: 7.92/ 8.13 (June 26,  2014)
Exchange Rate
61.32 (Dollar), 78.18 (Euro),
98.83 (Pound) , 57.38 (Yen) [October 20, 2014 to October 24, 2014, weekly average]
Updated on 24 October, 2014
See Terminology section for explanations and notes.
 Global Indicators on 24 October, 2014

Global Economy


Aug, 2014

Sep, 2014

4.1 Q2-2014
Updated on  24 October, 2014
Emp : Unemployment Rate

Key Reports on 05 April, 2014
RBI's First Bi-monthly Monetary Policy 2014-15
Key Features of Union Budget 2014-15
Second Quarter Review of Monetary Policy 2013-14
Developments in India's Balance of Payments during April-June 2013-14
IMF World Economic Outlook (WEO) October 2013
IMF Global Financial Stability Report
IMF Fiscal Monitor
World Development Report 2014 - World Bank
World Economic Situation and Prospects 2013 - UN

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