Making Sense

"Accuracy of Observation is the equivalent of accuracy of Thinking" I wrote about the expectations from the MPC yesterday and as expected RBI hiked repo rate by 25 bps to 6.50%. Consequently, SDF rate now stands at 6.25% and MSF rate at 6.75%. MPC voted 4 - 2 for change in policy rate.  On the change in monetary policy stance, MPC voted 4 - 2 to maintain monetary policy stance " withdrawal of accommodation" Key Highlights from the MPC Rate decision 1. Global growth prospects have improved 2. Domestic growth is likely to be supported by higher Rabi acreage, sustained urban demand, improving rural demand, robust credit expansion, gains in consumer and business optimism and the government’s enhanced thrust on capital expenditure and infrastructure in the Union Budget 2023-24 3. While RBI acknowledged the continuing downward momentum in inflation in FY 24, it estimated inflation to rule above 4% (RBI has an inflation target of 4% +/- 2%) and domestic economic growth to...

Let's quickly run through some of the things I picked up over the last week Release of H2 Balance of Payment data 1. India reported a BoP deficit of $ 30.38 bn for Q2 ( $ 4.6 bn surplus for Q1). H1 BoP is at $ 25.78 bn.  Current account = Merchandise + Invisibles ( Services + Transfers + Income)                                 = - 147              + 92             ( 65          + 48            - 21         )                                 = - 55 bn $  Capital Account = Foreign Investment + Loans + Banking Capital + Rupee Debt Service + Other Capital                        ...

 India Oct trade deficit data came in at $ 26.91 bn. FY 22 - 23 till Oct came in at $ 183 bn.  Exports peaked in the first quarter of FY 22 - 23 and have steadily declined in line with a subdued global outlook. Exports contracted 9% mom to $ 29.78 bn while imports contracted 4% to $ 56.69 bn. Fall in exports was largely driven by  cotton yarn/handloom, gems and jewellery exports, and engineering goods. The Oct estimated services surplus came in at $ 12.28 bn and trade balance therefore stands at $ 14.63 bn. 

 India recorded BoP surplus of $ 4.5 bn for Q1 22-23. Current account deficit came in at $ 23.90 bn and capital account recorded a surplus of $ 28 bn explained by short term credit of $ 8.7 bn and $ 19 bn in bank capital. 1.        Merchandise     -68.50 As    Monthly trade deficit for first 5 months is usd 129 bn and for the balance of the year estimated deficit is usd 25 bn pm , then yearly number is likely at usd 300 - 305 bn. 2.        Invisibles           44.66 ( Services        31.71;  Transfers     22.85;  Income        -9.26)       The year end number is estimated at usd 160 bn wherein services surplus could average usd 30 bn pm ( usd 120 bn surplus); transfers at usd 80 bn and income outflow at usd 40 bn. I      Current Ac...