"To begin, begin."
—William Wordsworth
(English, 1770-1850)
Word for the day
Mea culpa (n)
An acknowledgment of one's
responsibility for a fault or error.
Malice towards none
Raise your hand if you know
what is Mudra Yojna?
Check with your rickshaw
puller, vegetable vendor, pakora vendor, tea seller...if they are aware!
First random thought this morning
When the world is feeling jittery about the consequences of a full
blown Trade War and need for diplomatic maneuvering is extreme, India is working
with a finance minister and minister for external affairs who not fully fit.
This is little unfortunate on three counts. One PM must be taking
lot of load of these two on himself and thus exhausting himself. Two, decision
making in these two critical ministries might be getting delayed. Three, there
must be lot of "backroom drama" taking place to replace the finance
minister, which may not be good for the government, party and perhaps country.
Dots not connecting
Last week, RBI surprised the financial markets quite a bit by
projecting a Goldilocks phase for Indian economy. RBI projected a positive
outlook for overall economic growth and a rather dovish outlook on inflation.
projected CPI inflation for 2018-19 to 4.7-5.1% in H1:2018-19 and 4.4% in H2
RBI projected that GDP growth to strengthen from 6.6% in 2017-18
to 7.4% in 2018-19, with risks evenly balanced. MPC resolution cites the
following two key reasons, amongst other, for acceleration in the pace of
economic activity in 2018-19.
(i) There are now clearer
signs of revival in investment activity as reflected in the sustained expansion
in capital goods production and still rising imports, albeit at a slower pace
than in January. Further the teething troubles relating to implementation of
the GST are receding; credit off-take has improved in the recent period and is
becoming increasingly broadbased, which portends well for the manufacturing
sector and new investment activity; large resource mobilisation from the
primary market could strengthen investment activity further in the period
ahead; the process of recapitalisation of public sector banks and resolution of
distressed assets under the Insolvency and Bankruptcy Code (IBC) may improve
the business and investment environment.
(ii) Global demand has been
improving, which should encourage exports and boost fresh investment.
On inflation, MPC taking the following factors consideration,
projected CPI inflation for 2018-19 to 4.7-5.1% in H1:2018-19 and 4.4% in H2—
(a) Overall food inflation
should remain under check on the assumption of a normal monsoon and effective supply
management by Government.
(b) International crude oil
prices have become volatile in the recent period, with a distinct hardening
bias in the second half of March, even as the increase in shale production was
more than expected. This has adversely impacted the outlook for crude oil
prices.
(c) Indian domestic demand
is expected to strengthen during the course of the year.
(d) The statistical impact
of an increase in HRA for central government employees under the 7th CPC will
continue till mid-2018, and gradually dissipate thereafter.
At the same time however RBI noted that "Notwithstanding these
salubrious developments, consumer confidence dipped in the March 2018 round of
the Reserve Bank’s survey, with the respondents expecting a moderation over the
year ahead in general economic conditions, employment situation and their
income. Overall sentiment in the manufacturing sector a quarter ahead also fell
in the March 2018 round of the Reserve Bank’s industrial outlook survey under
the weight of weaker prospects for production, order books, capacity
utilisation, employment and profit margins.".....to continue
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