In the first
quarterly review of monetary and credit policy RBI presented a very dismal
picture of the economy with little hope. Although RBI did express hope of a
slow progress going forward in the FY14, it gave little support to the view.
We read some headlines of the documents and see no need to
read between the lines.
Global economy
·
Global recovery prospects remain weak.
·
Global commodity price cycle stay benign, but
with upside risks to crude prices.
·
Global financial markets have entered into a
period of fresh turbulence.
Indian economy
·
Slowdown persists in the Indian economy.
Slow-paced recovery likely to shape later in 2013-14.
·
Aggregate demand continued to remain weak.
Improvement in aggregate demand requires overcoming high consumer price
inflation and infrastructure bottlenecks. Corporate investment intentions
remain subdued.
·
Corporate leverage has increased gradually.
Contagion from global bond sell off generates stress in Indian markets. Policy
recalibration became necessary with increased macro-financial risks. Amplifying
macro-financial risks warrant cautious monetary policy stance.
·
Risk aversion impacting credit, as asset quality
concerns persist. Sectoral deployment of credit indicates deceleration across
most sectors.
·
Headline inflation moderates but upside risks
persist. Revisions in administered prices restrict the moderation in inflation.
Pass-through of exchange rate depreciation could offset benefits from falling
commodity prices.
·
Agriculture growth is expected to pick up.
·
Industrial sector growth remains subdued. Supply
bottlenecks constraining core industries.
·
Services sector signals slowdown in growth.
·
Real wage growth moderates in the recent period,
driven by higher inflation in rural areas. Employment scenario weakened during
2011-2013.
·
Combined government finances budgeted to improve
in 2013-14. Fiscal consolidation resumed during 2012-13 mainly through
expenditure cutbacks.
·
Vulnerability indicators show further worsening.
External debt rose further in Q4 of 2012-13. Trade deficit continues to be a
concern in Q1 of 2013-14. CAD may moderate in 2013-14, but risks to its
financing remain.
To read the full document click on the following link:
Thought for the day
“Perhaps in time the so-called Dark Ages will be thought of as including our own.”
- Georg C. Lichtenberg (1742-1799)
Word of the day
Coaptation (n):
A joining or adjustment of parts to one another.
(Source: Dictionary.com)
Shri Nārada Uvāca
Will Haryana police slap sedition charges against the Congress leader who alleged that Rajya Sabha seats are sold for Rs100cr and therefore denigrated the Parliament of the country?
Remember, a cartoonist was charged with sedition for drawing a cartoon of the Parliament a few month ago!
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