IIP GROWTH, RETAIL INFLATION DIP

IIP GROWTH, RETAIL INFLATION DIP

The economy continued to witness high growth in industrial production in December and retail price inflation in January, despite both declining from their 17-month highs seen in the previous month. Despite persisting double-digit growth in capital goods and fast-moving consumer goods, the Index of Industrial Production (IIP) expanded at a slower pace of 7.4 per cent in December, from the upward revised 8.8 per cent in November.

Provisional estimates had put the November growth at 8.4 per cent. Infrastructure and construction grew 6.7 per cent, against 13.89 per cent in November. The numbers were bolstered by manufacturing and a low growth of 2.4 per cent a year ago due to demonetisation. INDIVJAL DHASMANA & ISHAN BAKSHI write.

The economy continued to witness high growth in industrial production in December and retail price inflation in January, despite both declining from their 17-month highs seen in the previous month.Despite persisting double-digit growth in capital goods and fast moving consumer goods, the Index of Industrial Production (IIP) expanded at a slower pace of 7.4 per cent in December, from the upward revised 8.8 per cent in November. Provisional estimates had put the November growth at 8.4 per cent. Infrastructure and construction grew 6.7 per cent, against 13.89 per cent in November.

The numbers were bolstered by manufacturing and a low growth of 2.4 per cent a year ago due to demonetisation.Madan Sabnavis, chief economist with CARE Ratings, said there was all-round performance, especially in manufacturing. “Cumulative growth at 3.7 per cent indicates that growth for the entire year could reach 5 per cent if this tendency is sustained.”

On the other hand, Consumer Price Index-based inflation fell from 5.21 per cent in December to 5.07 per cent in January, broadly in line with the Reserve Bank of India’s (RBI’s) projection. This justified the RBI stance of maintaining status quo on the policy rate. During the recent policy review, the RBI had raised projection for inflation to 5.1 per cent for the fourth quarter from the earlier 4.3-4.7 per cent.

“The CPI will move upwards” on implementation of the Budget proposals, said N R Bhanumurthy, Delhi-based economist at the National Institute of Public Finance. “Forget about interest rate cuts, get ready for rate hikes instead.”Morgan Stanley has predicted the RBI would tighten rates between October and December — or even before. Food inflation fell to 4.70 per cent from 4.96 per cent, while inflation in fuels fell to 7.73 per cent from 7.90 per cent. Vegetables prices remained high. These rose at 26.97 per cent in January, albeit less than 26.97 per cent in the previous month.

The gross domestic product (GDP) growth for the third quarter of the financial year is due this monthend. The second advance data is also expected then. Among the important data points to watch out for this month are Wholesale Price Indexbased inflation and exports data.

The GDP growth is estimated at 6.5 per cent in 2017-18 against 7.1 per cent in 2016-17, according to the Advance Estimates.The International Monetary Fund, World Bank, RBI and the Economic Survey have estimated this growth to be slightly higher at 6.6-6.7 per cent.Data showed that industrial performance and gross fixed capital formation, indicating investments, might recover in the third quarter. This was because the IIP had grown by 5.9 per cent in the third quarter of 2017-18, up from 3.3 per cent sequentially. IIP growth was on low base of last year.

The Business Standard, New Delhi, 13th February 2018

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said. Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm

Credit card spending growth declines on RBI gaze, stress build-up

Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem. “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and

CA Online

Search This Blog