The Reserve Bank of India has decided to keep its policy repo rate unchanged at 8.0% based on its assessment of the current macroeconomic situation in India. Inflation has been declining steadily and is expected to remain around 6% over the next year. While economic activity has slowed, conditions are improving for a pickup in growth for the fourth quarter and next fiscal year if coordinated policy efforts are successful.
In this white paper, we talk about the century-old trade and cultural relationships between United Kingdom and Telangana which makes these 2 regions natural allies for fostering trade. United kingdom’s knowledge centric, research industries specifically in the pharmaceutical sector, should aim to capitalize the impetus provided by the Telangana state to promote life science industries, “Pharma city” and “Pharma University”.
In this white paper, we talk about the century-old trade and cultural relationships between United Kingdom and Telangana which makes these 2 regions natural allies for fostering trade. United kingdom’s knowledge centric, research industries specifically in the pharmaceutical sector, should aim to capitalize the impetus provided by the Telangana state to promote life science industries, “Pharma city” and “Pharma University”.
Ways2Capital is one of the leading research house across the globe. The company basically provides recommendations for stocks cash & F&O traded in NSE & BSE,commodities including bullions, metals and agro commodities traded in MCX & NCDEX.
http://bit.ly/GEWaout2014
Les dirigeants sont de plus en plus conscients du potentiel inexploité de l'Afrique sub-saharienne. La population de l'Afrique subsaharienne est devrait croître plus rapidement que dans toutes les autres régions du monde. En conséquence, en 2040, le Continent africain devrait avoir la plus grande force de travail du monde et pourrait avoir une croissance économique plus rapide que n'importe quelle autre région.
The Key Highlights of Union Budget 2020-2021Udyen Jain
Finance Minister (FM) Nirmala Sitharaman has presented the Union Budget 2020-2021 of India on the 1st of February, 2020. Focusing on measures taken by the government towards reaching the target of a $5 trillion economy by the end of 2022.
Index of Industrial Production (IIP), on the domestic front, moved into the positive territory in November 2014, signalling improvement in growth momentum. We hope that going forward, the incipient signs of revival would transform into a firm recovery especially as there is some progress in investment intentions and business confidence is on the ascendant. On the global front, slowing growth in Japan and Euro Area has increased the uncertainties in global growth.
In the current issue of Economy Matters, we analyse the economic data coming out of Japanese and Euro Area economies, in the section on Global Trends. In Domestic Trends, we analyse the trends emanating out of the recent releases on IIP, Inflation, and Balance of Payments. The Sectoral Spotlight for this issue is on the topic “Enabling 'Make in India' Through Effective Tax Reforms”. In Focus of the Month, we look at the year gone by and list out the challenges which await us in 2015.
Appended below is the link to download the November-December 2014 of Economy Matters for your ready reference:
It is about economic analysis for US from 2014-2016Review my paper.docxBHANU281672
It is about economic analysis for US from 2014-2016
Review my paper and correct some grammers.
Besides, correct the wrong thing and add what the "blue word" suggested.
At the end of the analysis of 2016.
Add some changes and trend after the trump selection.
Part A
Introduction
My name is Yinan Hong. I am your portfolio manager from Trailblazer Investment Advisors. I am a CFA holder, equipped with sufficient financial knowledge. I will help my customers manage their wealth and try my best to gain as much as possible. There are three objectives for my clients, Sam and Amy Kratchman with $1,100,000(on an after-tax basis) inheritance. The first one is having enough money for their life after retirement at age 65. The second objective is raising college tuition for their two children. The last one is to buy a beach house with newfound inheritance.
Economic Analysis
2014
GDP Growth
The economic recovery of United States in 2014 became a light spot in global economy after the 2009 recession. The low price level, decreasing unemployment rate, better development of the estate and manufacturing industry made the economy continuously recover. However, some important indexes like the investment of the real estate, income of residents, manufacturing have not reached to the same level as it performed before the recession. The percentage change in Real Gross Domestic Product in 2014 increased in the former three quarters and then decrease in the Q4.
In the first quarter, the change of GDP was 2.1% negative growth
1
. The most important factor was the abominable weather. The personal consumption expenditures for nondurable goods decreased because
[1]
the inconvenient of buying. The Gross private domestic investment decreased 6.6% because of the huge lower equipment investment
1
. The exports decreased extremely and the imports increased. They all led to the negative growth.
Figure1
[2]
: CCI Index in 2014
The GDP growth reached to 4.0% in the second quarter. By analyzing the components that affected overall GDP growth, personal consumption expenditures and gross private domestic investment played an important role in this significant growth. Consumption contributed 2.56% change in GDP. After the severe weather, the private inventory investment, exports, fixed investment, and non-federal government spending increased. However, 5% more imports negatively impact GDP and offset those positive contributors. Purchasing Managers’ Index (PMI) also indicated that the economic situation would turns better. The overall PMI index was over 50 and kept the upward trend, which represents expansion of the manufacturing sector. Besides, as shown in figure 1, the consumer confidence index had an upward tendency, may because corporates operated better, unemployment rate decreased, and the income of residents increased.
Figure 2
[3]
Unemployment rate continuously went down in 2014, and the job market significantly became better. Businesses have added 10.9 million jobs ...
Industrial production growth continues to remain tepid, thus necessitating the need for urgent redressal steps from the government in the form of expediting execution of approved projects and providing a competitive market for coal and mining sectors. Global headwinds have not receded fully, with growth in Euro Area expected to remain lackadaisical for few more quarters. Japan and China are passing through a phase of below potential growth too. Under this backdrop of subdued global growth, policymakers need to announce more policy actions like 'Make in India' initiative and flexible labour policy to help lift domestic growth to a higher trajectory.
In the current issue of Economy Matters, we cover the latest IMF’s World Economic Outlook and the issue of deflation facing many advanced economies in the Section on Global Trends. In Domestic Trends, we analyse the trends emanating out of the recent releases on IIP, Inflation, Monetary Policy and Trade. We also discuss the Corporate performance for Q2FY15 in this section. The Sectoral spotlight for this issue is on the MSME sector. In Focus of the Month, sectoral experts provide their insightful viewpoints on the topic ‘Coal: Challenges and Way Forward’.
Ways2Capital is one of the leading research house across the globe. The company basically provides recommendations for stocks cash & F&O traded in NSE & BSE,commodities including bullions, metals and agro commodities traded in MCX & NCDEX.
http://bit.ly/GEWaout2014
Les dirigeants sont de plus en plus conscients du potentiel inexploité de l'Afrique sub-saharienne. La population de l'Afrique subsaharienne est devrait croître plus rapidement que dans toutes les autres régions du monde. En conséquence, en 2040, le Continent africain devrait avoir la plus grande force de travail du monde et pourrait avoir une croissance économique plus rapide que n'importe quelle autre région.
The Key Highlights of Union Budget 2020-2021Udyen Jain
Finance Minister (FM) Nirmala Sitharaman has presented the Union Budget 2020-2021 of India on the 1st of February, 2020. Focusing on measures taken by the government towards reaching the target of a $5 trillion economy by the end of 2022.
Index of Industrial Production (IIP), on the domestic front, moved into the positive territory in November 2014, signalling improvement in growth momentum. We hope that going forward, the incipient signs of revival would transform into a firm recovery especially as there is some progress in investment intentions and business confidence is on the ascendant. On the global front, slowing growth in Japan and Euro Area has increased the uncertainties in global growth.
In the current issue of Economy Matters, we analyse the economic data coming out of Japanese and Euro Area economies, in the section on Global Trends. In Domestic Trends, we analyse the trends emanating out of the recent releases on IIP, Inflation, and Balance of Payments. The Sectoral Spotlight for this issue is on the topic “Enabling 'Make in India' Through Effective Tax Reforms”. In Focus of the Month, we look at the year gone by and list out the challenges which await us in 2015.
Appended below is the link to download the November-December 2014 of Economy Matters for your ready reference:
It is about economic analysis for US from 2014-2016Review my paper.docxBHANU281672
It is about economic analysis for US from 2014-2016
Review my paper and correct some grammers.
Besides, correct the wrong thing and add what the "blue word" suggested.
At the end of the analysis of 2016.
Add some changes and trend after the trump selection.
Part A
Introduction
My name is Yinan Hong. I am your portfolio manager from Trailblazer Investment Advisors. I am a CFA holder, equipped with sufficient financial knowledge. I will help my customers manage their wealth and try my best to gain as much as possible. There are three objectives for my clients, Sam and Amy Kratchman with $1,100,000(on an after-tax basis) inheritance. The first one is having enough money for their life after retirement at age 65. The second objective is raising college tuition for their two children. The last one is to buy a beach house with newfound inheritance.
Economic Analysis
2014
GDP Growth
The economic recovery of United States in 2014 became a light spot in global economy after the 2009 recession. The low price level, decreasing unemployment rate, better development of the estate and manufacturing industry made the economy continuously recover. However, some important indexes like the investment of the real estate, income of residents, manufacturing have not reached to the same level as it performed before the recession. The percentage change in Real Gross Domestic Product in 2014 increased in the former three quarters and then decrease in the Q4.
In the first quarter, the change of GDP was 2.1% negative growth
1
. The most important factor was the abominable weather. The personal consumption expenditures for nondurable goods decreased because
[1]
the inconvenient of buying. The Gross private domestic investment decreased 6.6% because of the huge lower equipment investment
1
. The exports decreased extremely and the imports increased. They all led to the negative growth.
Figure1
[2]
: CCI Index in 2014
The GDP growth reached to 4.0% in the second quarter. By analyzing the components that affected overall GDP growth, personal consumption expenditures and gross private domestic investment played an important role in this significant growth. Consumption contributed 2.56% change in GDP. After the severe weather, the private inventory investment, exports, fixed investment, and non-federal government spending increased. However, 5% more imports negatively impact GDP and offset those positive contributors. Purchasing Managers’ Index (PMI) also indicated that the economic situation would turns better. The overall PMI index was over 50 and kept the upward trend, which represents expansion of the manufacturing sector. Besides, as shown in figure 1, the consumer confidence index had an upward tendency, may because corporates operated better, unemployment rate decreased, and the income of residents increased.
Figure 2
[3]
Unemployment rate continuously went down in 2014, and the job market significantly became better. Businesses have added 10.9 million jobs ...
Industrial production growth continues to remain tepid, thus necessitating the need for urgent redressal steps from the government in the form of expediting execution of approved projects and providing a competitive market for coal and mining sectors. Global headwinds have not receded fully, with growth in Euro Area expected to remain lackadaisical for few more quarters. Japan and China are passing through a phase of below potential growth too. Under this backdrop of subdued global growth, policymakers need to announce more policy actions like 'Make in India' initiative and flexible labour policy to help lift domestic growth to a higher trajectory.
In the current issue of Economy Matters, we cover the latest IMF’s World Economic Outlook and the issue of deflation facing many advanced economies in the Section on Global Trends. In Domestic Trends, we analyse the trends emanating out of the recent releases on IIP, Inflation, Monetary Policy and Trade. We also discuss the Corporate performance for Q2FY15 in this section. The Sectoral spotlight for this issue is on the MSME sector. In Focus of the Month, sectoral experts provide their insightful viewpoints on the topic ‘Coal: Challenges and Way Forward’.
1Introduction My name is Yinan Hong. I am your port.docxaryan532920
1
Introduction
My name is Yinan Hong. I am your portfolio manager from Trailblazer
Investment Advisors. I am a CFA charter holder, equipped with sufficient financial
knowledge. I will help my customers manage their wealth and try my best to gain??
as much as possible. There are three objectives for my clients, Sam and Amy
Kratchman who have recently inherited … and have current savingswith
$1,100,000(on an after-tax basis) inheritance. The first one is having enough money
for their life after retirement at age 65. The second objective is raising college tuition
for their two children. The last one is to buy a beach house with newfound inheritance.
Ending summary
Economic Analysis
2014
GDP Growth
The economic recovery of United States in 2014 became a light brightspot in
global economy after the 2009 recession. The low price level do you mean low infl?
If so that isn’t really a great thing at the current time, decreasing unemployment rate,
better development of the what is the estate?estate and manufacturing industry made
the economy continuously recover although at a much lower rate than prev recoveries.
However, some important indexes like the investment of the real estate, income of
amy kratchman � 2016/10/16 12:32 PM
已设置格式: ⾏行行距: 1.5 倍⾏行行距
2
residents residents?, manufacturing have not reached to the same level as it performed
before the recession in 2014 – true – but RE was performing very well and is a strong
area of growth in 14. The percentage change in Real Gross Domestic Product in 2014
increased in the former three quarters and then decrease in the Q4.not true
In the first quarter, the change of GDP was 2.1% not correctnegative growth1.
The most important factor was the abominable weather. The personal consumption
expenditures for nondurable goods decreased because 1what is this? the inconvenient
of buying your table (footnoted) does not imply a decrease. The Gross private
domestic investment decreased 6.6% because of the huge lower equipment
investment1. The exports decreased extremely and the imports increased. They all led
to the negative growth.
Figure12 : CCI Index in 2014
The GDP growth reached to 4.0% in the second quarter. By analyzing the
components that affected overall GDP growth, personal consumption expenditures
1http://bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&904=2013&903=1&9
06=q&905=2016&910=x&911=0
2 FactSet
3
and gross private domestic investment played an important role in this significant
growth. Consumption contributed 2.56% change in GDP. After the severe weather,
the private inventory investment, exports, fixed investment, and non-federal
government spending increased.this is a rebound in pretty much all areas However, 5%
more imports negatively impact GDP and offset those positive contributors.
Purchasing Managers’ Index (PMI) also ...
In this issue of Economy Matters, we analyse the recent Fed rate hike and Euro Zone economic prospects, in the section on Global Trends. We have covered data trends in GDP, IIP, Inflation, Monetary Policy and Trade in the Domestic Trends section. Find out the results of 2QFY16 In Corporate Performance section. Taxation section covers the views of Sumit Dutt Mazumder, former Chairman of CBEC on GST. The Sectoral Spotlight for this issue is on Financial Conditions Index for 3QFY16. Read Focus of the Month, to know about ‘Skilling India’, wherein experts from diverse areas present their views.
This monthly briefing highlights how the world economy is struggling to gain momentum, emerging economies facing policy dilemma in trying to stabilize currencies and the G20 meeting making a call for new measures to lift growth and create jobs.
For more information:
http://www.un.org/en/development/desa/policy/wesp/wesp_mb.shtml
Dear Investors,
September saw a spillover of the previous month’s equity
market correction. The main reason for this was the continuing
bleak global events, which also negated domestic macro greenshoots to a large extent. In the West, the possibility of a US Fed
rate hike lingers, keeping investors globally on their toes.
Amidst this global weakness, uncertainties of global markets
with respect to the Euro have reduced after Alexis Tsipras’
Syriza party returned to power once again in Greece, this time
with a majority. The Chinese government is also taking
initiatives like tightening trading rules on forex and stock
market to stabilize their economy. The slowdown in China in a
way has been India’s gain, which has led to India emerging as
the top destination for FDI investments, attracting $30 billion
by the end of June 2015.
Closer home, better looking green-shoots portray a recovering
economy. Industrial growth has been above 4% for the past 2
months, whereas retail inflation continues to remain lower.
Although there has been a double digit deficit in the rainfall
this year, RBI is not too much worried about the pressure on
the food prices given the comfort it has derived from the
actions by the government to manage supply. An addition to
these positives was RBI increasing the foreign investment limit
in central government securities. This will help create a new
pool of money to compensate for the lowering SLR imposed on
banks.
Markets rejoiced at the bonnes nouvelles (good news) of the
50 basis points rate cut by RBI at the fourth bi-monthly
meeting. The main objective behind this was to enhance
growth in the economy. Mr. Raghuram Rajan hopes that
investment should respond more strongly after some certainty
about the extent of monetary stimulus in pipeline, even if the
transmission is low. With this transmission, investments in the
real economy would increase. This announcement was then
followed by a highly ‘dovish’ stance, with the RBI repeating
that it would remain in an ‘accommodative mode’. The rate cut
has increased the cumulative rate cut this year to 125 bps. It is
hearting that banks like SBI has cut its base rate by 40 bps.
All in all, the month saw events that were unexpected, events
that created a yin-yang sentiment among investors and events
that made India shining more convincing. RBI has taken the
first bold step on its part. The question now is what the
government will do on its part to grow our economy!
CII’s flagship monthly publication Economy Watch has been now revamped and rechristened as ‘Economy Matters’. Apart from encompassing all the key features of the old version, the new issue also carries a new section on Corporate Profitability to keep readers abreast about the latest trends in corporate performance. The ‘Economy Matters’ brought out by CII Research seeks to provide an in-depth update on current trends in the domestic and international economy and helps in tracking policy developments and understanding industry dynamics.
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Lifting the Corporate Veil. Power Point Presentationseri bangash
"Lifting the Corporate Veil" is a legal concept that refers to the judicial act of disregarding the separate legal personality of a corporation or limited liability company (LLC). Normally, a corporation is considered a legal entity separate from its shareholders or members, meaning that the personal assets of shareholders or members are protected from the liabilities of the corporation. However, there are certain situations where courts may decide to "pierce" or "lift" the corporate veil, holding shareholders or members personally liable for the debts or actions of the corporation.
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Alter Ego: If there is such a unity of interest and ownership between the corporation and its shareholders or members that the separate personalities of the corporation and the individuals no longer exist, courts may treat the corporation as the alter ego of its owners and hold them personally liable.
Group Enterprises: In some cases, where multiple corporations are closely related or form part of a single economic unit, courts may pierce the corporate veil to achieve equity, particularly if one corporation's actions harm creditors or other stakeholders and the corporate structure is being used to shield culpable parties from liability.
Lifting the Corporate Veil. Power Point Presentation
5th RBI Monetary Policy
1. 1
प्रेस प्रकाशनी PRESS RELEASE
संचार विभाग, कें द्रीय कायाालय, एस.बी.एस.मार्ा, मुंबई-400001
________________________________________________________________________________________________________
DEPARTMENT OF COMMUNICATION, Central Office, S.B.S.Marg, Mumbai-400001
फोन/Phone: 91 22 2266 0502 फै क्स/Fax: 91 22 2266 0358
भारतीय ररजर्ा बैंक
RESERVE BANK OF INDIA
र्ेबसाइट : www.rbi.org.in/hindi
Website : www.rbi.org.in
इ-मेल email: helpdoc@rbi.org.in
December 2, 2014
Fifth Bi-Monthly Monetary Policy Statement, 2014-15
By Dr. Raghuram G Rajan, Governor
Monetary and Liquidity Measures
On the basis of an assessment of the current and evolving macroeconomic
situation, it has been decided to:
keep the policy repo rate under the liquidity adjustment facility (LAF)
unchanged at 8.0 per cent;
keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per
cent of net demand and time liabilities (NDTL);
continue to provide liquidity under overnight repos at 0.25 per cent of bank-
wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day term
repos of up to 0.75 per cent of NDTL of the banking system through auctions;
and
continue with daily one-day term repos and reverse repos to smooth liquidity.
Consequently, the reverse repo rate under the LAF will remain unchanged at
7.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0
per cent.
Assessment of the Global Economy
2. Since the fourth bi-monthly monetary policy statement of September 2014,
the global economy has slowed, though the recent sharp fall in crude prices will
have a net positive impact on global growth. The recovery in the United States is
broadening on the back of stronger domestic consumption, rising investment and
industrial activity. In the Euro area, headwinds from recessionary forces continue to
weaken industrial production and investment sentiment. In Japan, growth may be
picking up again on the back of stronger exports, helped in part by further
quantitative and qualitative easing that has led to a depreciation of the yen. In
China, disappointing activity and still-low inflation have prompted rate cuts by the
People’s Bank of China. In other major emerging market economies (EMEs),
downside risks to growth from elevated inflation, low commodity prices, deteriorating
labour market conditions and stalling domestic demand have become accentuated.
2. 2
3. Notwithstanding the cessation of asset purchases by the US Fed, financial
markets have remained generally buoyant on abundant liquidity stemming from
accommodative monetary policies in the advanced economies (AEs). The search for
yield has driven global equity markets to new highs, with investors shunning gold
and commodities. Capital flows to EMEs recovered from market turbulence in the
first half of October, although some discrimination on the basis of fundamentals is
becoming discernible.
Assessment of the Indian Economy
4. Domestic activity weakened in Q2 of 2014-15, and activity is likely to be
muted in Q3 also because of a moderate kharif harvest. The deficiency in the north-
east monsoon rainfall has constrained the pace of rabi sowing, except in the
southern States. Despite reasonable levels of water storage in major reservoirs, the
rabi crop is unlikely to compensate for the decline in kharif production earlier in the
year and consequently, agricultural growth in 2014-15 is likely to be muted. This,
along with a slowdown in rural wage growth, is weighing on rural consumption
demand.
5. Despite the uptick in September, the growth of industrial production slumped
to 1.1 per cent in Q2 with negative momentum in September, unable to sustain the
improvement recorded in the preceding quarter. The persisting contraction in the
production of both capital goods and consumer goods in Q2 reflected weak
aggregate domestic demand. However, more recent readings of core sector activity,
automobile sales and purchasing managers’ indices suggest improvement in likely
activity. Exports have buffered the slowdown in industrial activity in Q2 but, going
forward, require support from partner country growth.
6. In the services sector, the October’s purchasing managers’ survey indicates
deceleration in new business. In contrast, tourist arrivals and domestic and
international cargo movements have shown improvement. Thus, various
constituents of the services sector are emitting mixed signals.
7. A rise in investment is critical for a sustained pick-up in overall economic
activity. While low capacity utilisation in some sectors is a dampener, the recent
strong improvement in business confidence and in investment intentions should
help. In this context, the still slow pace of reviving stalled projects, despite
government efforts, warrants policy priority, even as ongoing efforts to ease stress in
the financial system unlock resources for financing the envisaged investment push.
8. The fiscal outlook should brighten because of the fall in crude prices, but
weak tax revenue growth and the slow pace of disinvestment suggest some
uncertainty about the likely achievement of fiscal targets, and the quality of eventual
fiscal adjustment. The government, however, appears determined to stay on course.
9. Retail inflation, as measured by the consumer price index (CPI), has
decelerated sharply since the fourth bi-monthly statement of September. This
reflects, to some extent, transitory factors such as favourable base effects and the
usual softening of fruits and vegetable prices that occurs at this time of the year. On
the other hand, protein-rich items such as milk and pulses continue to experience
upside pressures, reflecting structural mismatches in supply and demand. The
absence of adequate administered price revisions in inputs like electricity has
contributed to the easing of inflation in the fuel group.
10. In the non-food non-fuel category, inflation eased broadly in September.
Further softening of international crude prices in October eased price pressures in
3. 3
transport and communication. However, upside pressures persist in respect of
prices of clothing and bedding, housing and other miscellaneous services, resulting
in non-food non-fuel inflation for October remaining flat at its level in the previous
month, and above headline inflation. Survey-based inflationary expectations have
been coming down with the fall in prices of commonly-bought items such as
vegetables, but are still in the low double digits. Administered price corrections, as
and when they are effected, weaker-than-anticipated agricultural production, and a
possible rise in energy prices on the back of geo-political risks could alter the
currently benign inflation outlook significantly.
11. Liquidity conditions have eased considerably in Q3 of 2014-15 due to
structural and frictional factors, as well as the fine tuning of the liquidity adjustment
framework. With deposit mobilisation outpacing credit growth and currency demand
remaining subdued in relation to past trends, banks are flush with funds, leading a
number of banks to reduce deposit rates. The main frictional source of liquidity has
been the large release of expenditure/transfers by the government. In view of
abundant liquidity, banks’ recourse to the Reserve Bank for liquidity through net
fixed and variable rate term and overnight repos and MSF declined from `803
billion, on average, in Q1 to `706 billion in Q2 and further to `476 billion in October-
November. The use of export credit refinance also declined from 52.6 per cent of the
limit in Q2 to 32.6 per cent in October-November. The revised liquidity management
framework introduced in September, has helped the weighted average cut-off rates
in the 14-day term repo auctions as well as in the overnight variable rate repo
auctions to remain close to the repo rate, and the volatility of the weighted average
call rate has fallen, apart from episodes of cash build-up ahead of Diwali holidays.
12. The Reserve Bank determines the need for open market operations (OMO)
based on its assessment of monetary conditions rather than on a specific view on
long term yields. On an assessment of the permanent liquidity conditions, the
Reserve Bank conducted OMO sales worth `401 billion during October to December
so far.
13. Merchandise exports declined in October, mainly reflecting sluggish external
demand conditions, but also the softening of international prices resulting in lower
realisations. For the period April-October as a whole, however, export growth
remained positive although the deceleration since July requires vigilance. With
import growth remaining modest on account of the decline in POL imports due to
falling crude prices, the trade deficit narrowed from its level a year ago. Gold
imports have surged since September in volume terms, largely reflecting seasonal
demand. Barring month-to-month variations, non-oil non-gold import growth has
remained moderate, with anecdotal evidence of imports substituting for shortfalls in
domestic production. Even as external financing requirements stay moderate, all
categories of capital flows, except non-resident deposits, have been buoyant. The
consequent accretion to reserves denominated in US dollars has been moderated
by valuation effects resulting from the strength of the US dollar.
Policy Stance and Rationale
14. Consistent with the balance of risks set out in the fourth bi-monthly monetary
policy statement of September, headline inflation has been receding steadily and
current readings are below the January 2015 target of 8 per cent as well as the
January 2016 target of 6 per cent. The inflation reading for November – which will
4. 4
become available by mid-December – is expected to show a further softening.
Thereafter, however, the favourable base effect that is driving down headline
inflation will likely dissipate and inflation for December (data release in mid-
January) may well rise above current levels.
15. The key uncertainty is the durability of this upturn. The full outcome of the
north-east monsoon will determine the intensity of price pressures relating to
cereals, oilseeds and pulses, but it is reasonable to expect some firming up of
these prices in view of the monsoon’s performance so far and the shortfall
estimated for kharif production. Risks from imported inflation appear to be
retreating, given the softening of international commodity prices, especially crude,
and reasonable stability in the foreign exchange market. Accordingly, the central
forecast for CPI inflation is revised down to 6 per cent for March 2015 (Chart 1).
16. Turning to the outlook for inflation in the medium-term, projections at this
stage will be contingent upon expectations of a normal south-west monsoon in
2015, international crude prices broadly around current levels and no change in
administered prices in the fuel group, barring electricity. Over the next 12-month
period, inflation is expected to retain some momentum and hover around 6 per cent,
except for seasonal movements, as the disinflation momentum works through.
Accordingly, the risks to the January 2016 target of 6 per cent appear evenly
balanced under the current policy stance.
17. Some easing of monetary conditions has already taken place. The weighted
average call rates as well as long term yields for government and high-quality
corporate issuances have moderated substantially since end-August. However,
these interest rate impulses have yet to be transmitted by banks into lower lending
rates. Indeed, slow bank credit growth is mirrored by increasing reliance of large
corporations on commercial paper and domestic as well as external public
issuances.
18. Still weak demand and the rapid pace of recent disinflation are factors
supporting monetary accommodation. However, the weak transmission by banks of
the recent fall in money market rates into lending rates suggests monetary policy
shifts will primarily have signaling effects for a while. Nevertheless, these signaling
5. 5
effects are likely to be large because the Reserve Bank has repeatedly indicated
that once the monetary policy stance shifts, subsequent policy actions will be
consistent with the changed stance. There is still some uncertainty about the
evolution of base effects in inflation, the strength of the on-going disinflationary
impulses, the pace of change of the public’s inflationary expectations, as well as the
success of the government’s efforts to hit deficit targets. A change in the monetary
policy stance at the current juncture is premature. However, if the current inflation
momentum and changes in inflationary expectations continue, and fiscal
developments are encouraging, a change in the monetary policy stance is likely
early next year, including outside the policy review cycle.
19. While activity appears to have lost some momentum in Q2, probably
extending into Q3, conditions congenial for a turnaround – the softening of inflation;
easing of commodity prices and input costs; comfortable liquidity conditions; and
rising business confidence as well as purchasing activity – are gathering. These
conditions could enable a pick-up in Q4 if coordinated policy efforts fructify in
dispelling the drag on the economy emanating from structural constraints. A durable
revival of investment demand continues to be held back by infrastructural
constraints and lack of assured supply of key inputs, in particular coal, power, land
and minerals. The success of ongoing government actions in these areas will be key
to reviving growth and offsetting downside risks emanating from agriculture – in view
of weaker-than-expected rabi sowing – and exports – given the sluggishness in
external demand. Anticipating such success, the central estimate of projected
growth for 2014-15 has been retained at 5.5 per cent, with a gradual pick-up in
momentum through 2015-16 on the assumption of a normal monsoon and no
adverse supply/financial shocks (Chart 2).
20. The sixth bi-monthly monetary policy statement is scheduled on Tuesday,
February 3, 2015.
Alpana Killawala
Press Release: 2014-15/1124 Principal Chief General Manager