GlobalSource Partners | Country Insights | India

In the erstwhile regime, FDI into India was intermediated through the `Foreign Investment Promotion Board' (FIPB). For a certain class of transactions, e.g. FDI in certain industries, approval of FIPB was required. For most FDI, FIPB is not in the picture as the FDI process requires no involvemen...

Industrial production picks up?

INDIA · Report · 25 May 2017

A new Index of Industrial Production for India has been released by the Statistical Office. There is a visible divergence in growth rates in the new and old series. Has industrial production picked up, or is the apparent increase a consequence of the change in the index and its composition? Th...

Legislative action to address the banking crisis

INDIA · In Brief · 08 May 2017

What just happened?The government got an `ordinance' done which amends the Banking Regulation Act. Under the Constitution of India, an `ordinance' is a modification to a law, done in an emergency by the administration, when Parliament is not in session. The claim is that we have an urgent problem...

The State of the Economy

INDIA · Presentation · 04 May 2017

Microdata on firms show reason for optimism, but there is concern about credit stress, and the banking crisis continues unabated. On monetary policy, we are still in the early days of the inflation-targeting framework, and the RBI has yet to feel the difficulties of meeting an inflation target.

How is investment faring?

INDIA · Report · 12 Apr 2017

Micro data about investment is reliable and is released immediately after the end of a quarter. Hence, we are now able to observe the Jan-Mar 2017 quarter. This is the first macro data release for the Jan-Mar 2017 quarter. The broad picture of a stalling of aggregate nominal investment under imp...

RBI tries to manage surplus liquidity in India's banking system

INDIA · In Brief · 08 Apr 2017

The Monetary Policy Committee of the RBI unanimously voted to leave the policy rate -- the repo rate unchanged. At the same time the Monetary Policy Rate Corridor was narrowed by the RBI management to +/- 25 bps (from +/-50), thereby raising the reverse repo rate. This would allow RBI to suck out...

BJP's landslide victory in Uttar Pradesh

INDIA · In Brief · 12 Mar 2017

The BJP witnessed a landslide victory in the biggest Indian state of Uttar Pradesh (U.P). The results could help pave the way for a shift in Indian politics away from identity politics towards issues of governance. The state of Uttar Pradesh has primarily relied on caste and religious identity is...

Q3 GDP at 7% despite demonetisation

INDIA · In Brief · 01 Mar 2017

India's GDP numbers for the Oct-Dec 2016 quarter released by the Central Statistical Office show that GDP grew by 7 percent. This appears to be at odds with almost everything experienced in the quarter that witnessed a withdrawal of 86 percent of Indian currency. One explanation for the high GDP ...

Monetary Policy for 2017

INDIA · Report · 09 Feb 2017

Inflation has declined, and the outlook for inflation is soft. Demonetization is likely to have induced a slowdown in the economy, which will feed back into soft inflation. We expect weak output growth in calendar year 2017 across a variety of output measures. In order to achieve the inflation ta...

Monetary policy stance changed to neutral

INDIA · In Brief · 09 Feb 2017

The Monetary Policy Committee took yet another unanimous decision on policy rates. This time, in its third meeting, the unanimous decision was to keep the policy rate unchanged, and to change the stance of monetary policy from “accommodative” to “neutral”. It is difficult to understand how a deci...

The budget announcement for 2017-18

INDIA · Report · 01 Feb 2017

The economy has faced considerable headwinds through a combination of weak investment demand, a balance sheet problem in many large firms and most banks, and the demonetisation episode. There was a range of possibilities which were being discussed of a relatively gloomy nature. These included int...

Banking cash transaction tax seems to be happening

INDIA · In Brief · 31 Jan 2017

A slip up in the computer systems by the income tax department shows that some sort of banking cash transaction tax ("BCTT") is likely to be announced in the budget speech today. This was invented by the UPA in 2005, and abandoned by them in 2009. Their formulation had a tax of 0.1% on cash withd...

The budget after demonetization

INDIA · In Brief · 23 Jan 2017

The demonetization exercise, that the government claimed was a bold move against black money, could set the tone for the forthcoming budget on February 1, 2017. It appears to have been successful as a political strategy that persuaded people that the government wishes to punish the rich and corru...

The de-monetization shock sinks in

INDIA · Report · 21 Dec 2016

Five shocks are playing out: monetary, exports, investment, banking and aggregate demand. The contraction in cash began on November 8 and will worsen until December 31. The shock will gradually be alleviated from January 1 onwards. We estimate that normalcy on cash in circulation will return b...

First facts about the impact of de-monetization upon business cycle conditions

INDIA · Report · 12 Dec 2016

We carefully examine the first five well-trusted data releases about the real economy that report on November 2016. This early data suggests that the shock in the event month (November 2016) was worse than what we observed in September 2008, the event month of the Lehman bankruptcy.