The government was almost celebrating when the full year fiscal deficit came in at the targeted rate of 3.4% of GDP. Of course, this is a revised target because the original target of 3.2% was modified in the interim budget. In a tough year, stemming fiscal deficit at 3.4% is surely no mean achievement but there is more to it than meets the eye. One must break up the revenue and expenditure side to get a granular picture.
Most investors thought of fixed maturity plans (FMPs) as something that was absolutely safe. After all, they were debt securities and the funds were locked in so there was no maturity mismatch. Most Indian FMP investors were in for a rude shock when a couple of mutual funds unilaterally decided to extend the date of their FMP maturity by more than one year. The reason was that these funds had invested heavily in Zee group bonds and most of that had soured. What are the options now?
The first phase of elections has taken off and the fate of 91 seats is sealed. Over the next 6 weeks, we will get to see 6 more phases of polling before the final results are announced on May 23rd. What exactly will drive the outcome of Elections 2019 this time around?
The talk of town in the last few days was the Supreme Court order striking down the RBI circular issued on February 12th 2018. The circular had made it mandatory that any borrower above Rs.2,000 crore defaulting on the loan for more than 180 days would be automatically referred to NCLT. The Supreme Court has struck down this circular on the grounds that they were ultra vires the powers of the RBI. It is a case of very strong words used by the SC for a statutory regulator.
The monetary policy had little by way of surprise when it announced a 25 basis point cut in rates. That was already factored in the market. In fact, the market was hoping for a bigger cut or a shift in stance to “accommodative”. That was not to happen as the RBI stuck to its neutral stance. If you look at the rate cut from a broader perspective, it just restores the status quo prior to June 2018. The RBI had earlier hiked rates by 50 bps in June and August. So, the cuts in February and April only restore the original status of rates.
