The OPEC meeting on December 06th and 07th finally agreed upon the quantum of supply cuts. The total supply cut would be to the tune of 1.20 million bpd. Out of the cut, OPEC would contribute 8 lakh barrels while Russia, Mexico and other would contribute 40 lakh barrels. This is higher than the 1 million bpd originally estimated. What would be the impact of this move?
In the last few months, Indian analysts and economists have spent a lot of time and ink worrying about the likely effects of a full-fledged trade war. Trade war is not even helping the US so it is unlikely to help any other country. Obviously, a trade war will lead to a slowdown in exports and a consequent slowdown in overall economic growth. Both the IMF and the World Bank have projected an impact of 30 to 40 bps due to the trade war. But that is not the immediate worry for India. What is happening on the yield curve is a lot more important. Here is why.
The monetary policy announced on 05th December was largely along expected lines. A lot has been said about the repo rates but that was held at 6.50% along expected lines. This ensured that the reverse repo rate stayed at 6.25% while the bank rate stayed at 6.75%. While the policy has downsized its inflation expectations for the next few months, it still believes that the inflation risk is elevated due to oil price uncertainty. Also, the RBI is of the view that the full impact of food inflation may not be visible as yet. Now for the 3 issues…
While announcing the GDP numbers for Q2, Mr. SC Garg boasted that India would still be the fastest growing economy in the world. While that is true on paper, the claim glosses over a lot of larger problems that could manifest in the coming months. Let us look at two sets of macroeconomic issues that are actually being glossed over today.
Directors resigning from the boards of Indian companies with a diplomatic letter to the board are nothing new. But what happened with the JM ARC board recently marked a major shift in the way independent directors have acted. Anil Khandelwal, independent director on the board of JM Financial, ARC went on to resign putting down serious governance issues as the reason in his resignation letter. So, what exactly were the major concerns that he had?
