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Credit stress in the non-financial firms
INDIA · Report · 20 Nov 2018 · 1 response

We utilize firm data to identify the set of large stressed non-financial firms. We measure the size of balance sheet, borrowing and bank borrowing in these firms relative to the overall non-financial corporate sector. About 60% of the debt outstanding – by banks or by others – is in stressed firm...

Stress in NBFCs and real estate companies
INDIA · Report · 16 Nov 2018

We review the stages of the slow-moving crisis in Indian finance. At present, NBFCs are facing a stress test. We analyze the small subset of listed NBFCs and identify the firms that have fared the best and worst since the date of the IL&FS default. We also identify the firms with the highest and ...

Macroeconomic conditions in the Jul-Sep quarter
INDIA · In Brief · 06 Nov 2018 · 1 response

GDP measurement in India is unreliable. We have built a `coincident indicator', which is a linear combination of trusted and well-measured series, to help get a sense of business cycle conditions.We are in a position to have an estimate for the Jul-Aug-Sep 2018 quarter: +3.87% above trend. There ...

A milestone in the institutional structure of RBI
INDIA · In Brief · 31 Oct 2018

1. Under the existing RBI Act, there is no autonomy of the RBI. Section 7 of the RBI Act empowers the government to give `directions' to the RBI on any subject, without any transparency provisions. This feature of the RBI Act has always been present. Many people in the Indian discourse have loose...

A small firm default that says something more
INDIA · In Brief · 17 Oct 2018

In our previous report, of 15 October, we had said: Deleveraging at NBFCs has adverse effects upon the real economy, particularly in areas where NBFCs were important, such as real estate and micro-finance. The stock market drama of 17 October turned out to be about a default by a real estate comp...

Macroeconomic and financial stress in five areas
INDIA · Report · 15 Oct 2018

​In India today there are five areas of stress that are interacting with each other. They are: 1) the bond market; 2) non-bank financial companies; 3) mutual funds; 4) the banking crisis; and 5) currency depreciation. Investor flows into mutual funds, which fed demand for primary issuance of b...

ILFS default and what comes next
INDIA · Report · 23 Sep 2018

Non Bank Finance Companies (NBFCs) have succeeded in India given the difficulties of banks. They have somewhat bank-like assets with bond market financing. Fixed income mutual funds have become an important method for channeling household and corporate treasury money into the bond market. But the...

Drama in IL&FS and its implications
INDIA · Report · 17 Sep 2018

IL&FS is a financial/infrastructure conglomerate with a consolidated balance sheet of about Rs.1 trillion. Reflecting the difficulties of the economy and the financial system, this firm has been under credit stress for many years. Some of its subsidiaries recently defaulted. This could potentiall...

Will RBI defend the rupee?
INDIA · In Brief · 12 Sep 2018

The Indian rupee has depreciated sharply in the first week of September. Since 3rd September 2018 it has been the fastest depreciating currency in Asia.There seem to be three key factors at play. First, EM currencies are under pressure. Second, India is a large oil importer and global oil prices ...

A fresh debate over GDP measurement, and historical growth
INDIA · Report · 03 Sep 2018

The GDP measurement debate was reignited by a government committee that proposed a historical (“back”) series that accentuated the superiority of GDP growth during the 10 years of the UPA, compared with the four years of the present government. Many economists mechanically interpret GDP data, ...

RBI hikes interest rates
INDIA · In Brief · 01 Aug 2018

The Monetary Policy Committee of the Reserve Bank of India hiked the policy interest rate by 25 basis points to 6.5 per cent today. The move came after RBI had hiked rates for the first time after 4 years in June 2018. Inflation data in India shows that while there has been a moderation of food p...

Can private banks fill the gap created by weak public banks?
INDIA · Report · 30 Jul 2018

An optimistic reading of Indian banking involves the proposition that India is achieving a useful de facto transition from public-sector-bank domination to a domination by private banks. In this reading, private bank credit is growing fast and will supplant the lack of credit growth by the publi...

A clear recovery in firm data, less so in other indicators
INDIA · Report · 27 Jun 2018

What is the state of business cycle conditions in India today? The net sales of large firms show a clear recovery. There is strong export buoyancy and early signs of easing of the balance sheet crisis in non-financial firms. But the picture is not good for investment and profitability. There is ...

The Indian economy
INDIA · Presentation · 08 Jun 2018

While conventional GDP data shows a certain story, net sales at current prices may tell a different story.

The RBI hikes the policy rate
INDIA · Report · 06 Jun 2018

​The Monetary Policy Committee of the RBI hiked the policy repo rate by 0.25 bps to 6.25%, voting 6-0 in favor of the rate hike. Today’s monetary policy decision took place at a time when there is pressure on the rupee to depreciate, bond yields are rising, EMs have been witnessing capital outflo...

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