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
The Monetary Policy announced by the RBI on 08th February was largely along expected lines. One needs to understand the context in which the policy was announced. On the one hand, the Indian economy is just about emerging from the cash shortfall caused by the demonetization. On the other hand, inflation continues to stay under control and IIP and core sector are showing green-shoots of recovery. The global scenario is the bigger question mark. BREXIT is raising serious questions over the sustainability of the common currency model while the UK still does not have clarity on its trade strategy post BREXIT. Above all, the US is increasingly making protectionist noises even as Indian companies are already under pressure due to recent measures like H1-B visa restrictions, immigration checks and a likely border tax on outsourcing. It is in this highly charged atmosphere that the Monetary Policy was announced by the RBI… Continue reading
In fact, risks could come from a variety of sources…
In a recent report, global investment bank, Nomura, has identified some key global risks for the year 2017. Here is a summary of the key risks perceived for the calendar year 2017… Continue reading
The big story for the Indian economy over the last 2 years has been the dividends from cheap oil. Brent crude fell from a high of $114/bbl in mid-2014 to a low of $28/bbl in Feb 2016. Over the last 8 months, the price of Brent crude has nearly doubled to $54/bbl. In fact, since the OPEC agreed upon supply quotas in its November 30th meet at Vienna, the price of Brent has moved up from $46/bbl to $54/bbl. Here are 3 things that India needs to watch out for in the coming months… Continue reading
Could we see a greater shift out of monetary policy focus?
Over the last few weeks, there are 2 independent events that may be indicative of a larger paradigm shift that may be happening. Japan decided to focus on fiscal policy rather than monetary policy. Trump has already started talking about massive tax cuts and infrastructure spending. Is this shift towards fiscal policy for real? Continue reading