Thought for
the day
“The object of life is not to be on the side of the
majority, but to escape finding oneself in the ranks of the insane.”
-
Marcus Aurelius (Greek, 121-180)
Word of the
day
Ennoble (v)
To elevate in degree, excellence, or respect; dignify;
exalt: a personality ennobled by true
generosity.
(Source: Dictionary.com)
Shri Nārada Uvāca
With PMO now out in open without any shield and SP also
preparing to distance itself from Congress ahead of general elections next
year, what business you expect to be conducted in Winter Session of Parliament?
Reality check @Nifty 6200
Growth
GDP growth is likely to remain in 4.5-5% range in FY14 and
pick up only marginally in FY15.
Most forecasters, other than government of India, have GDP
growth forecast ranging between 4 and 5% for FY14 and marginal pick up in FY15.
In the last policy statement, RBI had categorically stated
that “On the domestic front, growth has weakened with continuing sluggishness
in industrial activity and services. The pace of infrastructure project
completion is subdued and new project starts remain muted. Consumption, while
relatively firm so far, is starting to weaken even in rural areas, with durable
goods consumption hit hard. Consequently, growth is trailing below potential
and the output gap is widening. Some pick-up is expected on account of the
brightening prospects for agriculture due to Kharif output and the
upturn in exports. Also, as infrastructure investments are expedited, and as
projects cleared by the Cabinet Committee on Investment come on stream, growth
could pick up in the second half of the year.
As the optimism on CCI initiatives has waned substantially
in recent days, and Winter session of the Parliament is expected to be a Wash
Out in light of the recent developments in Coal Block Allocation case and UP
parties (SP and BSP) distancing themselves from Congress ahead of general
elections, due to local political compulsions.
In view of this next 2-3 quarters are not likely to witness
any conspicuous pick up in growth.
Inflation
Both WPI and CPI are showing tendency to rise again. Easy
outlook on global liquidity may fuel commodity prices when INR is bottoming at
an elevated 61/USD level
Both WPI and CPI have shown tendency to rise in past couple
of months. It is more likely to exacerbate in coming months as high base effect
wanes, easy global liquidity expectations fuel commodity prices and INR bottoms
out at elevated 61/USD levels.
As RBI highlighted “WPI inflation, which had eased in Q1 of
2013-14, has started rising again as the pass-through of fuel price increases
has been compounded by the sharp depreciation of the rupee and rising
international commodity prices.”
It is expected that the negative output gap will eventually
exercise downward pressure on inflation, and the process will be aided as
supply side constraints, especially relating to food and infrastructure, ease.
In RBI’s assessment “However, the current assessment is that
in the absence of an appropriate policy response, WPI inflation will be higher
than initially projected over the rest of the year. What is equally worrisome
is that inflation at the retail level, measured by the CPI, has been high for a
number of years, entrenching inflation expectations at elevated levels and
eroding consumer and business confidence. Although better prospects of a robust
kharifcharvest will lead to some moderation in CPI inflation, there is
no room for complacency.”
…to continue tomorrow
Also read Case
for Nifty 6700 and Case
for Nifty 4700
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