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Business cycle conditions, Jan-Mar 2019
INDIA · Report · 13 May 2019

The best measure of business cycle conditions in India is the coincident indicator, which is a linear combination of well-measured underlying indicators. The coincident indicator deteriorated slightly in Jan-Mar 2019, to +0.8% above trend. The leading indicator gives us a sense of how the coin...

Financial stress – feedback loops
INDIA · Report · 08 May 2019

Ordinarily, economic systems find equilibrium. There is a shock, the problem heals as gaps between supply and demand are closed, and the system finds a new equilibrium. However, when positive feedback loops are present, such benign outcomes may not arise. A system can rapidly move away from th...

Positive feedback loops
INDIA · In Brief · 28 Apr 2019

The key thing to watch for in the financial stress is the positive feedback loops. Here are six pieces that we see today.1. It is believed that one of the chunks of cash that ADAG group hopes to obtain in coming weeks is Rs.20 billion from Zee group, which has itself defaulted on some payments. T...

Credit stress in ADAG group
INDIA · In Brief · 27 Apr 2019

In the last year of Indian financial stress, we have seen defaults by IL&FS, Zee Group, Supertech, etc.The biggest business house facing difficulties, though, is Anil Dhirubai Ambani Group ("ADAG"). This group comprises the following firms: Reliance Communications, Reliance Capital, Reliance Infr...

Peering into the parliamentary election
INDIA · Report · 24 Apr 2019

In this report, we sketch our views on the main questions surrounding the elections. What are the factors at work shaping the minds of voters? What are the polls saying? How precise are these forecasts? What will change in terms of policy in the next five years? What changes if a coalition govern...

Developments in financial stress
INDIA · Report · 22 Apr 2019

The defining problem of the Indian economy is the lack of private investment. A stressed financial system is one factor hampering private investment. In this note, we review the stress in a few components of the financial system. About 35% of the non-financial firms' balance sheet is under str...

Investment data for Jan-Mar 2019
INDIA · Report · 05 Apr 2019

One of the most important elements of business cycle conditions in India is investment. The official GDP data yields poor estimates of investment demand. We construct aggregates using micro data about individual projects. Overall investment under implementation grew by about 10% in the last five ...

Business cycle conditions
INDIA · Report · 11 Mar 2019

The conventional GDP data shows a recovery in late 2017. However, the Indian GDP data became less reliable with the methodology change in 2015, which applies to the series from 2012 onwards. We assess business cycle conditions through three pathways. We have constructed a “coincident indicator...

Areas of financial stress
INDIA · Report · 26 Feb 2019

This note presents an update on the stress in the financial system and its implications for the economy. The stress in the economy started with a slow deterioration of the balance sheet of non-banks in 2011. About one third of the non-financial firm balance sheet is now under credit stress, in...

Business cycle conditions, Oct-Dec 2018
INDIA · Report · 17 Jan 2019

The best measure of business cycle conditions in India is the coincident indicator, which is a linear combination of well-measured underlying indicators. The coincident indicator deteriorated slightly in Oct-Dec 2018, to +2.68% above trend. The leading indicator gives us a sense of how the co...

Five major challenges that shook India’s economy in 2018
INDIA · In Brief · 03 Jan 2019

As a service to our clients, we are reproducing this Op-Ed by Ila Patnaik, which appeared in ThePrint on December 29, 2018. From GST to RBI to NPAs, both institutions and governance had a turbulent ride. The year 2018 saw significant challenges for the Indian economy. Implementation of the GST, a...

The RBI governor is likely to find a way to transfer the right amount of money to help the government meet its fiscal targets
INDIA · In Brief · 19 Dec 2018

As a service to our clients, we are reproducing this Op-Ed by Ila Patnaik, which appeared in ThePrint on December 19, 2018. The RBI governor is likely to find a way to transfer the right amount of money to help the government meet its fiscal targets At a time when the Narendra Modi government is ...

State elections and a new Governor
INDIA · Report · 11 Dec 2018

Two major developments in India have reduced the recent uncertainty about politics and economics in the country. The first was the counting and announcements of results of state elections in which the ruling BJP lost elections. The Congress party, which had lost the 2014 elections, made a comebac...

Stress at RBI
INDIA · In Brief · 10 Dec 2018

We should see the larger context of Urjit Patel's departure.1. There is significant economic stress. We are at the early stages of recovery from a tough recession that ran from 2012 to 2017. About 40% of the balance sheet of non-financial firms is in stressed firms. Matters are particularly diffi...

Governor Patel resigns
INDIA · Report · 10 Dec 2018

The resignation of RBI Governor Urjit Patel was a surprise after the last RBI board meeting, which is reported to have been quite cordial. While the governor cited personal reasons for his resignation, it is suspected that the forthcoming RBI board meeting on December 14 had agenda items about RB...

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