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RBI's Monetary Policy Committee trims growth forecast and raises inflation projection
INDIA · Report · 08 Apr 2022

The first bi-monthly meeting of the RBI's Monetary Policy Committee (MPC) concluded today. In contrast to the previous monetary policy announcement, the focus this time has been on managing inflation and withdrawing the excess liquidity through formal instruments. The RBI acknowledged that the di...

Challenges for the Indian Central Bank: Trade-off between managing inflation and debt of the government
INDIA · In Brief · 05 Apr 2022

The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) will meet after two days to decide on the policy rate. While inflation has been above the RBI's upper threshold of 6 percent for two consecutive months, RBI has maintained status quo on rates and kept an accommodative stance to sup...

Fiscal aspects of the pension reform
INDIA · Report · 04 Apr 2022

Generous pension promises were made to civil servants in previous decades. The fiscal consequences of these promises started growing with rising longevity. In 2003, it was estimated that the implicit pension debt, on account of all government workers or pensioners (summing across all government o...

India's current account deficit records a sharp surge
INDIA · In Brief · 01 Apr 2022

India's current account deficit widened to nine year high of USD 23 billion in the October-December quarter of 2021-22. Expressed in terms of GDP, the current account deficit surged to 2.7 percent of GDP. In the previous quarter (July-September), the current account deficit was USD 9.9 billion, a...

Impact of the Ukraine war on India
INDIA · Report · 21 Mar 2022

In thinking about the impact of the Ukraine war for India, there are three pathways: trade and investment, global financial/economic conditions, and geopolitical problems. In terms of trade and investment, there are low connections with the two countries. In terms of global financial/economi...

Budget 2022-23: A push for jobs through construction
INDIA · Report · 03 Feb 2022

One of the most important challenges facing the post-pandemic Indian economy is job loss due to the pandemic. In one initiative, the MSME sector, which employs a large number of people, is being given a helping hand through credit guarantees. In another, job creation is being addressed through a ...

Highlights of the India Budget 2022-23
INDIA · Report · 01 Feb 2022

Finance Minister of India Nirmala Sitharaman presented the Union Budget 2022-23, in which she proposed a big boost to capital expenditure and announced several infrastructure projects to pump-prime private investment and economic recovery. The focus of the policy response to Covid-19 has been on ...

Current political situation in India - five states go to the polls in February 2022
INDIA · Report · 21 Jan 2022

​Five states in India will go to the polls in February 2022. These assembly elections, particularly in the state of Uttar Pradesh, are being seen as semi-finals for the parliamentary elections in 2024. In particular, if the Bhartiya Janata Party (BJP), which is the ruling party in Uttar Pradesh a...

Difficulties in the recovery
INDIA · Report · 03 Jan 2022

We treat the best days of January 2021 as the benchmark of what was seen in the nature of a rapid recovery after the lockdown of March and April 2020. In late December 2021, the economy was behind those values in important aspects. The pace of recovery has not been good in recent months, particul...

A sharp recovery in credit quality
INDIA · Report · 27 Dec 2021

Prior to the pandemic, a major problem in the economy was the credit stress of the large private financial and non-financial firms. A re-examination of an array of measures suggests that substantial gains have taken place. These are partly about the genuine superior performance of large priva...

Watching the recovery – household data remains weak
INDIA · Report · 16 Nov 2021

The pandemic has largely subsided, google mobility data is close to pre-pandemic conditions, and a nice export boom is in place. But the view of household data is concerning. Household data shows a weak recovery after the peak of the second wave in May 2021. The Indian labor market is mostly a cl...

Watching the recovery - September 2021
INDIA · Report · 07 Sep 2021

High frequency data shows that the recovery from the bottom of Wave 2 is progressing better than the recovery from the lockdown of March/April 2020. If present trends continue, we will be back to the pre-Wave-2 conditions (i.e., Jan/Feb 2021) within a month or two. There is a striking gap between...

Over-optimistic forecasters
INDIA · Report · 16 Aug 2021

As the year progresses, GDP forecasts in India are improving, as is to be expected. But there is a bias in the form of over-optimism. Crude bias correction is applied, based on four years of evidence, to obtain a modified consensus forecast for 2021-22: 6.8% GDP growth. GDP measurement in Indi...

Withdrawal of the retrospective tax
INDIA · Report · 06 Aug 2021

The government of India has moved a bill to withdraw the retrospective tax introduced in 2012 that led to litigation such as the Vodaphone and Cairn cases. While the bill will put an end to 17 cases in which the tax was imposed retrospectively, this is not a move to resident-based taxation. ​

Watching the recovery
INDIA · Report · 21 Jul 2021

The economy has gone through a sharp decline, with the extreme lockdown of March 2020, followed by a recovery, a second wave, and then a second recovery. The first recovery had proceeded for 245–322 days while the second recovery has been in motion for 50–78 days. The second downturn was milder t...

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