Inflation Targeting – Has Monetary Policy Failed to Deliver??

The sharp increase in inflation (CPI) to 7.35% for Dec’19 has put a question mark on whether inflation targeting (IT) based monetary policy really works? While the question may be pertinent, it would actually be ridiculous to blame monetary policy for this spurt. More importantly, it is essential to deliberate on the proper indicator of inflation which monetary policy can influence. Here is a look at the dynamics of inflation and how monetary policy works. Continue reading Inflation Targeting – Has Monetary Policy Failed to Deliver??

Revisiting NBFCs (Non Banking Finance Companies)

NBFC sector has been receiving intense attention, most recently due to default by Dewan Housing finance Corporation Ltd (DHFL). The trouble which began about a year ago with the default of IL&FS has seen skeletons tumbling out of the closet. While RBI has proactively provided liquidity to the market, it has refused to bail out any specific company and rightly so. So, what are the issues involved and what is the way forward? Here is a look. Continue reading Revisiting NBFCs (Non Banking Finance Companies)

Tata Steel – Understanding the Strategic Realignment

The decision to call-off the joint venture with ThyssenKrupp is quite a setback for Tata Steel trying to reduce its global exposure. Yet, it is an interesting phase for the company with series of developments reflecting the strategy shift. The focus is shifting back to domestic production in contrasts with the global expansion undertaken during 2004-07. Here is a look at the developments and their impact on the company. Continue reading Tata Steel – Understanding the Strategic Realignment

Understanding Rural Income Pattern (Part I)

The distressful condition of poor in general and rural population in particular has become an important issue during this election and desirably so. However, while data on income level and income pattern in urban India is easier to obtain, getting the same for rural India is tougher. To address this issue, NABARD (National Bank for Agriculture & Rural Development) undertook an extensive survey, the report on which was published in Aug’18. The report gives valuable insights on income as well as borrowings level of rural households. Here is a look at the details. Continue reading Understanding Rural Income Pattern (Part I)

Wealth Inequality – Is There A Way Out??

While media continues celebrate wealth and growing number of millionaires, the income disparity across the world is getting worse. As per the Oxfam report released earlier this week, an astonishing 82% of total wealth created last year was cornered by the top 1% while the bottom half saw no increase at all. The increase, over $760 bn, was seven times what is needed to bring about 15% of the world’s population out of poverty. Here is a look at some more details from the report. Continue reading Wealth Inequality – Is There A Way Out??

Index of Industrial Production – October ’18 Performance..

Index of Industrial Production (IIP) has recorded an increase of 8.1% for the month of Oct’18 as per the data released by MOSPI yesterday. While monthly rate may show substantial fluctuation, average growth rate for first seven months of this financial year also shows a substantial improvement. Average growth rate, which was only 5.2% till sept’18, climbs to 5.6% after including the result for Oct’18. Other that, average rate over first seven months is better than growth rate recorded in all the years since FY13. While IIP growth is important in general, it is more important since industries account for maximum number of employment and therefore, its performance is critical in generation of more employment opportunities. Here is a look at its various components and a longer term trend analysis. Continue reading Index of Industrial Production – October ’18 Performance..

Analysing RBI’s Instruments for “Liquidity Management”

Among the points of contention between RBI and the government is market liquidity condition. While RBI says that there is enough liquidity in the market, government is not sure of that. Both have a point there. The enormity of the issue is evident from the fact that during September month alone, RBI transacted close to Rs 14 lakh crore to maintain liquidity. But how exactly does RBI manage liquidity and how is it different from managing money supply through monetary policy. Here is an attempt to understand RBI’s liquidity management operations.
Continue reading Analysing RBI’s Instruments for “Liquidity Management”

Operationalizing Brexit – What is at Stake??

The process of withdrawal of United Kingdom from European Union has gained momentum with release of draft agreement about a week back. As per the current legal statute, UK would be out of EU on 29th March 19 and both the parties have to enter into a deal before that to avoid disruption to businesses and life, in general. Current trade between EU and UK  stands at over $500 bn of goods trade, $235 bn of services and about $1.4 trillion of EU assets being managed by UK based financial services firms. Despite the pressure on British currency, EU also has a lot to lose from the exit. While the negotiations have not been as tough as anticipated and as nerve wracking as in the case of much feared Greek exit, fingers are still crossed. Here is a look at the economic aspect of the withdrawal and why an orderly withdrawal matters. Continue reading Operationalizing Brexit – What is at Stake??

GDP, Sept 18 – Analyzing the Performance

After hitting a high of 8.2% in June 18 quarter (Q1’FY19), GDP growth has slowed to 7.1% in Sept’18 quarter (Q2’19) as per the data released by MOSPI today. GVA growth rate is also in the same line at 6.9% against 8.0% in Q1. Even though the rate has moderated over previous quarter, it is fourth quarter of 7%+ growth and gives sense of stability to the economy after going through the adjustments due to demonetization and GST. However, issues like sharp rise in crude price rise or disturbance in the financial market may keep the growth rate under check in the current quarter. In terms of absolute value, GDP at constant price is Rs 34 lakh crore and Rs 45.5 lakh crore at current prices. Continue reading GDP, Sept 18 – Analyzing the Performance

Corporate Analysis – Hindalco Industries

Hindalco Industries registered consolidated revenue of Rs 1.16 lakh crore in FY18, almost the same as L&T and Tata Steel. However, company doesn’t have as much visibility as the other two, partially due to lower profitability of the business. Its net profit for the year was about Rs 6,000 crore against as high as Rs … Continue reading Corporate Analysis – Hindalco Industries
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