Indian Economy slowdown

Moody’s take on Indian economy

Highlights:

v FY20 GDP Projection, lowered from 5.8% to 4.9%.

v Key concerns:

§ Weakening consumption

§ Rural financial stress

§ Low job creation

§ Liquidity constraints

§ NBFC credit crunch has exacerbated slowdown

§ Steps to stimulate demand will be limited in offsetting slowdown

v Measures unveiled by Government:

§ Income support for farmers

§ Monetary policy easing

§ Broad corporate tax cut

v FY21 Projection:

§ Modest recovery expected

§ Growth will be weaker versus recent years

§ Weak demand, tight liquidity to constrain auto earnings

§ Slow growth will reduce debt servicing capabilities of households.

Other Economists take on economy slowdown:--

v Market’s assumption true; Fiscal deficit way higher than Govt.’s claims.

v Govt. roadmap for future Fiscal roadmap will be crucial.

v Not seeing the favourable macros needed for yields to move.

v There’s not much space on Monetary or Fiscal side.

v Govt. needs to look at imaginative approaches.

v Govt. could look at a passive approach which does not need much political capital.

Allow NBFC to go sour over a period of time. Banks takes that hit and Govt. recapitalizes the banks. This does not involve much political capital and Govt. most likely to take this passive approach.

v Another approach is Bad bank approach.

v Govt. and RBI’s first objective must be to break the cycle of low growth and bad loans.

v Need to pinpoint specific reasons behind low growth to find a remedy.

Comments

Foreign Inflows Fuel Indian Market Surge: A Weekly Market Update

Dear Reader, Foreign Portfolio Inflows Propel Indian Markets The Indian markets experienced a surge in foreign portfolio funds, propelling the Nifty to conquer Mount 19k and even target Mount 20k. Inflows into India Equity Funds reached their highest level since Q2 2015, while India Bond Funds also saw a record weekly inflow until July 12. De-Sinofication and Asian Stock Rush One major factor behind the inflows is de-Sinofication, as Western investors turn away from China and seek opportunities in other Asian markets. This shift in flows has been driven by disappointment over China's recovery, leading foreign investors to seek refuge in Asian stocks. US Dollar's Impact on Emerging Markets The weakening US dollar has been bullish for emerging markets, including India. Renowned strategist Stephen Jen predicts further USD depreciation, signaling potential growth for emerging markets. However, some experts caution that the current environment differs significantly fro...

Indian Banking System

War in the Domestic Skies Heats up: IndiGo's Mega Aircraft Deal

Dear Readers, In this week's newsletter, we delve into the escalating battle in India's domestic skies as IndiGo , the leading airline, secures a ground-breaking aircraft deal. IndiGo 's recent agreement with French aerospace giant Airbus for the purchase of 500 aircraft has set a new record in the aviation industry. Not only is this the largest-ever single aircraft order placed by any airline with Airbus , but it also signifies a defining moment in aviation history. Industry veterans and analysts emphasize that IndiGo 's deal is commercially significant, as it secures delivery slots for the next decade. Such a massive order empowers customers to negotiate commercially viable terms, including engine selection, aircraft type mix, and pricing. With this milestone order, IndiGo has soared above Tata-owned Air India , which had surprised the industry with its turnaround plans and a 470-aircraft order placed with Boeing and Airbus earlier this year. Post-pandem...

People School

Search This Blog