Editor's Desk

RBI raises repo and reverse repo rates by 25 and 50 bps

by

Finally, the RBI Governor mustered some courage to hike the much needed Repo and Reverse Repo rates by 25bps and 50 bps during its monetary policy review meeting today. With this, the repo rate will stand at 5.75% and reverse repo rate will go up to 4.5%. Meanwhile, CRR has been kept unchanged at the current level of 6.0%. Story Updating..

RBI embarked on gradual exit from an overtly accommodative monetary stance, while ensuring that the nascent recovery is not
derailed. Thereafter, as recovery gathered momentum and so did inflation, RBI’s stance was one of balancing the objectives of

Read moreRBI raises repo and reverse repo rates by 25 and 50 bps

India July rainfall ~12% below normal so far

by

According to the latest update on the progress of South West monsoon 2010, all India rainfall during the monsoon season so far (between 1 June and 21 July) and during July (from 1-21 July) were ~14% and ~12% deficient, respectively, compared to their long period average (LPA).

During the monsoon season so far (June 1- July 21), actual rainfall in South peninsula has been 9% above LPA. In fact, South peninsula is the only region where the actual rainfall so far has exceeded the LPA. The actual rainfall in North West India and Central India was 12% and 19% below the LPA, respectively. Progress of rainfall

Read moreIndia July rainfall ~12% below normal so far

Categories /

India Reforms 2.0 – GST Closer to Rollout

by

The FM has proposed to start with a differential tax structure for goods and services in the first year and gradually converge to a uniform rate structure applicable for all goods and services in the third year. He has proposed Central GST (CGST) and requested states to consider State GST (SGST) rates equivalent to the former. Likely effective rates are summarised in the table below:

Rate Structure – There will be two tier rate structure for goods and separate rate for services in initial years. It is

Read moreIndia Reforms 2.0 – GST Closer to Rollout

Deficit Watch – fiscal improvement + red flag on the current account

by

India’s current account balance has been subject historically to pronounced seasonality – improving sharply in the second half of each fiscal year (October- March). For FY09/10, however, we were surprised that the seasonal impact did not apply – instead, the current-account deficit actually widened for October 2009-March 2010 (to 3.4% of GDP, from 2.2% of GDP for April-September 2009). There were two main factors responsible; the trade balance was broadly unchanged between the two halves of the fiscal year

Read moreDeficit Watch – fiscal improvement + red flag on the current account

Energy Sector De-regulation – India Vs China

by

Deregulating petrol (gasoline) prices on 25 June is an important, bold and encouraging step for India’s fuel price reforms. We expect India to deregulate diesel prices in 2HFY11, which is critical to the sustainable growth of State-owned oil companies’ profitability. Both the Chinese and Indian governments have increased gas prices substantially in May. While the hike is mainly to offset the loss from imports of expensive gas by PetroChina, Indian gas companies, such as OIL and ONGC, can get true economic benefits from the gas hike.

Read moreEnergy Sector De-regulation – India Vs China