สรุปข่าวเศรษฐกิจอินเดียประจำวันที่ 31 มีนาคม 2557

RBI likely to maintain status quo in April 1 monetary policy

The Reserve Bank may maintain status quo in the upcoming annual monetary policy on April 1 as retail inflation, especially in food items, is yet to show definite signs of moderation. RBI too had earlier indicated that its priority would be to bring down inflation, although India Inc has been putting pressure on the central bank to cut rates in order to boost growth. In its third quarter review of monetary policy, the Reserve Bank of India (RBI) in January raised the key repo rate by 0.25 per cent to 8 per cent in a bid to curb inflation. Besides outlook on inflation, the central bank would also take into account the strengthening rupee and its impact on exports, she added. Strengthening of the rupee against dollar in the past few days following inflow of foreign currency has put pressure on exports. In addition, unseasonal rains during this month may stoke food inflation in the near term. The RBI is scheduled to announce its annual monetary policy for 2014-15 on April 1. The annual rate of inflation, based on the monthly wholesale price index, stood at 4.68 per cent in February. Retail inflation was at a 25-month low of 8.1 per cent in the month. Morgan Stanley said volatility in food prices and a base effect will result in the CPI inflation to go up to 8.5 per cent in the near-term and cool off to 6.5 per cent by December. Raghuram Rajan, who took charge as Governor of the apex bank last September, raised the rates during his first policy announcement, rightly foreseeing a pressure on the inflation front. He increased it again for a third time since he took charge, in January, when the market was expecting a pause. It can be noted that even though the RBI has not formally adopted inflation targeting, it has gone public on targeting consumer price inflation down to 8 per cent by January 2015 and further down to 6 per cent by January 2016, as per the recommendations of the Patel committee.

(Source: Economic Times)

India to grow at 5.5% in FY 2015: Ficci

India's economic growth is likely to pick up and reach 5.5 per cent in 2014-15 as industrial output will recover to expand at 3.3 per cent, says Ficci. The Economic Outlook Survey by the industry chamber pegs agriculture and services sector growth in the next financial year, starting April 1, at 3.3 per cent and 7 per cent respectively. It also estimates that growth in the fourth quarter of the current fiscal will pick up marginally to 5 per cent. On inflation, it said that majority of the participating economists felt that going ahead both WPI and retail inflation rates would remain range bound. Inflation based on Wholesale Price Index (WPI) is expected to stay at about 5.5 per cent in 2014-15 and the one based on the Consumer Price Index (CPI) will be at about 7.9 per cent, as per the survey. On CPI becoming the new anchor for the Reserve Bank's monetary policy, the opinion was divided. Some economists felt that it is a good indicator, while others were of the opinion that monetary policy decision on the basis of a single parameter may not be a correct approach. Further, the median forecast for fiscal deficit as a per cent of GDP stands at 4.4 per cent for 2014-15. This is higher than the 4.1 per cent estimate announced in the Interim Budget last month. Subsidy burden continues to be a bothering factor and can lead to fiscal slippages, according to the economists polled by Ficci. On the external sector, the survey pegs current account deficit (CAD) to remain in the comfort zone at 2.2 per cent in 2014-15. Moreover, the rupee value is projected at 61 against the US dollar by March-end 2015.

(Source: Economic Times)

Raghuram Rajan may leave interest rates unchanged

February's inflation levels, on wholesale and consumer prices, may have signified a breather for many but that may not be enough for Reserve Bank of India governor Raghuram Rajan to change his stance on interest rates at the monetary policy review on Tuesday. Rajan, who has made clear that his primary goal is to tame prices, may hold the repo rate at 8% citing inflationary expectations, according to an ET poll. The repo rate is that at which the central bank lends to banks. In fact, he may warn that the price decline could easily be reversed if food prices resume their upward climb as rain and hail in some states and El Nino weather conditions crimp farm output in the coming quarters. But some are hopeful that he may signal easing towards the end of the year as consumer prices remain below the 8% year-end target for a few months. Investors are also keen to see whether the central bank's position on currency management has changed from shunning intervention towards managing volatility. The rupee's 15% gain since the low of August last year is threatening a fragile export recovery because the Chinese yuan is depreciating, making Indian goods costlier overseas. Rajan is living up to the anti-inflation tradition of the Chicago School. A committee headed by deputy governor Urjit Patel has suggested targeting consumer inflation at 4% in a two percentage point band, as part of an evolving monetary policy framework. Although this has not been adopted formally, Rajan has given enough signals that he's inclined to follow that trajectory. Retail inflation, as measured by the consumer price index, eased to a two-year low of 8.10% in February from 8.79% in January, having touched a high of 11.24% in November. Inflation based on the wholesale price index fell to a nine-month low of 4.68% in February on the back of a drop in food and fuel prices, having been at 5.05% in January. But data from Barclays shows inflationary expectation is running at 12%, the highest in recent memory. Furthermore, monetary authorities may also wait for signals from the new government that will present a full budget once it takes office in May. How quickly rate cuts may begin will also depend a lot on how efficient the new government will be in managing its finances. Hopes of a decisive government has led to more than $8.8 billion pouring into Indian markets this year. That could accelerate after May if a stable government takes charge.

(Source: Economic Times)

UPA's job generation record better: Jairam

The perception that more jobs were created during the 1998-2004 National Democratic Alliance government than that of the Congress-led United Progressive Alliance (UPA) isn't based on facts, said Jairam Ramesh, the minister for rural development. From projections based on a National Sample Survey Organisation (NSSO) study, 60 million jobs were created between 1999-2000 and 2004-05, against 15 million during 2004-05 to 2011-12. Ramesh said the jobless rate under the NDA went up from 7.3 per cent in 1999-2000 to 8.3 per cent in 2004-05; under the UPA, it came down to 5.6 per cent in 2011-12. This suggested females could be moving to more lucrative job categories. e highlighted the employment growth during the UPA regime has been marked by increase in regular wage employment and enrolment of girls in schools that led to their withdrawal from the workforce.He also credited the UPA with the highest-ever yearly growth in gross domestic product in a decade and for pulling 140 million people above the poverty line in the past 10 years.

(Source: Business Standard)

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