Q3 GDP Surprises

Have we overestimated the role of cash in India economy?

To say the least, the Q3 GDP estimates and the revised full-year estimates of GDP were a big surprise. Over the last few weeks estimates for Q3 GDP ranged from 5.6% to 6.3% while full year GDP ranged from 6.1% to 6.5%. It was therefore a pleasant surprise when the CSO announced 7% GDP growth in Q3 and an estimated 7.1% for the full year. Does it mean that the impact of the demonetization has passed uneventfully or does it mean that there is something in the figures that do not meet the eye? Continue reading “Q3 GDP Surprises”

Impact of Demonetization on Indian Economy

Even as the demonetization drive was in full swing during the months of November and December, the media was full of scary reports. It was predicted that the cash crunch caused by the demonetization drive will suppress liquidity, subdue demand and force a downside in the overall business cycle. As data points finally start to emerge, a lot of the brouhaha over the demonetization seems to have been largely exaggerated. Or perhaps, the likely outcome was never really understood. Check this out… Continue reading “Impact of Demonetization on Indian Economy”

Key takeaways from the GDP advance estimates for 2016-17

The Central Statistical Office (CSO) affiliated to the Ministry of Statistics and Programme Implementation (MOSPI) put out the advance estimates for full year GDP on Friday. This is the first of the estimates and hence subject to change. The early estimates are not too encouraging. Full year GDP fro 2016-17 is likely to be 7.1% as against 7.6% in the previous financial year. That is a full 50 bps lower than the previous year and is a matter of concern. Here are the key takeaways… Continue reading “Key takeaways from the GDP advance estimates for 2016-17”

Why the Decision of the MPC to Not Cut Rates was a Good Decision

The markets were largely disappointed by the decision of the Monetary Policy Committee (MPC) to maintain status quo on rates. The expectation was for a 25-50 bps cut in rates. However, the choice of the MPC not to cut rates was a good decision in retrospect. Here is why… Continue reading “Why the Decision of the MPC to Not Cut Rates was a Good Decision”

Key takeaways from the December 2016 Monetary Policy

The RBI monetary policy announced on December 07th 2016 had an element of surprise in that it maintained status quo on repo rates. Considering the low levels of inflation, weak growth and the side effects of demonetization, the markets were expecting a rate cut in the range of 25-50 bps. However, the RBI chose to err on the side of caution.. While the details of the deliberations of the Monetary Policy Committee (MPC) will be available on December 21st, there was virtual unanimity on the decision to maintain status quo on rates. Here are the key highlights of the monetary policy announcement… Continue reading “Key takeaways from the December 2016 Monetary Policy”