The Human Development Index (HDI) report released by United Nations Development Programme (UNDP) yesterday paints a stark picture of inequality across the globe. While humanity has managed to bring a large number of people out of extreme poverty, newer forms of inequality have emerged. More worryingly, countries with low HDI not only have a low level of income, but also lower life expectancy which is as much as 20 years. Here is a look at some of the details and India’s standing.
The monetary policy committee (MPC) in its meeting today decided to take a pause on the rate cut, quite against the market expectation. However, the difficulty faced by the RBI governor during the post-policy press conference to justify a rate pause was evident. After all, growth has fallen to several years’ low of 4.5%, growth projections for FY20 has been cut again from 6.1% to 5%, after being cut from 7% to 6.1% in the last meeting and no sign of pick-up in any of the growth drivers. Yet, the reasoning was very simple. Rates have already been cut by 135 basis points and it takes time for the transmission and rate cut impact to be felt by the economy. After all, you cannot accelerate a recovery by simply increasing the dosage. That it was a unanimous decision makes it more credible. So, what made him so defensive?? Continue reading “The Rate Cut Pause – Defending the RBI Governor!”
GDP growth rate for the quarter ended Sept’19 (Q2’FY20) has turned out to be worse than Q1’20 (June’19) as per the data released by MOSPI today. Worse, gross fixed capital formation (FCF), measure of future productive capacity, declined by sharp 3%, reversal of 7% over previous quarter. Despite the government’s push to prop up the economy, reflected in government final consumption expenditure going up by 15.6%, the economy continues to lose momentum. Here is a brief analysis of the GDP data. Continue reading “GDP Growth – Sept’19 Performance Analysis”
The continued crisis in the financial sector has led to a credit squeeze and a dramatic shift in the sectoral distribution. The shift is so sharp that “Industries”, which received credit of about Rs 15 lakh crore during FY09-14, could garner only Rs 3.7 lakh crore in the next five years, as per RBI data. Aggregate credit growth has come down sharply from 16% CAGR during FY09-14 to less than 9% during FY14-19 and more worryingly, has declined in the first half of FY20. Here is a look at the composition of bank loan over last ten years and their growth rate.