A report by the SBI called for more reforms in the banking sector in India. File
| Photo Credit: Reuterss

As the Central government prepares for the Union Budget presentation on July 23, a research report by the State Bank of India (SBI) has highlighted crucial areas that need attention to drive sustainable economic growth and development in the country.

The report emphasises adherence to fiscal prudence while continuing on the path of fiscal consolidation, suggesting a fiscal deficit target of around 4.9%. “Government should focus on adherence to fiscal prudence and continue on the fiscal consolidation path, but at the same time refrain from obsessing too much over the fiscal stance,” the report stated.

To provide relief in tax structures, the report advocates aligning personal income tax rates with corporate taxes and gradually transitioning all payers to the New Tax Regime.

Additionally, it recommended considering tax parity for bank deposits to attract more savings and boost household financial savings.

For the agriculture sector, it highlighted the need to address issues like financing, livelihood support and the Agri Credit Guarantee Trust Fund.

The report also noted that the Minimum Support Price (MSP) has become politicised and suggested exploring alternatives as the current MSP policy reduces trade and export competitiveness. “The issues innate to MSP mechanism viz. needless politics, disincentivising private investment, neglect of non-MSP crops, reduction in export competitiveness and burden of trade disputes alternative mechanism needs to be looked into vigorously, viz. obligation to private parties for buying crops at MSP,” it said.

The report also suggested developing a comprehensive mineral strategy, especially for critical minerals, to ensure mass employment and secure the supply chain from exploration to recycling.

It called for more reforms in the banking sector in India, including the divestment of public sector banks (PSBs) and the stake sale in IDBI Bank. “After a decade of transformative changes, the Indian banking system stands much healthier ready to scale up to meet emerging challenges as the country embarks on the Viksit Bharat sojourn” it said. It also recommended changes to the Insolvency and Bankruptcy Code and the promotion of Production Linked Incentive (PLI) schemes for MSMEs to reduce import dependency.

The report also noted that by incorporating these suggestions into the upcoming Budget, the Government can lay a strong foundation for sustainable growth, promote financial inclusion, and drive economic resilience in the post-pandemic era.

New Delhi:

Global investment bank and financial company Morgan Stanley has stated that the PM Gati Shakti scheme has succeeded in giving a new fillip to India’s infrastructure development and multi-modal connectivity across highways, railways and ports that has spurred economic growth.

According to the report, India has scaled up its infrastructure strongly over the last decade, with higher investment that is also better targeted and potentially more productive.

“We expect India’s infrastructure investment to steadily increase from 5.3 per cent of GDP in FY24 to 6.5 per cent of GDP by FY29. Indeed, this implies that infrastructure investments are expected to register a strong 15.3 per cent CAGR, resulting in cumulative spending of USD 1.45 trillion over the next five years. In our view this will help to lift the investment rate, leading to a sustained period of high productive growth.”

Interestingly, the report also states that “contrary to popular perception, India’s physical infrastructure scale already compares favourably to China’s when viewed in the context of GDP differential.”

The report cites the World Bank’s Logistics Index Report, 2023, which records that the average Container Dwell Time in Indian ports was three days compared to four days for countries like the UAE and South Africa, seven days for the USA, and 10 days for Germany.

Indian Ports “turnaround time” has reached 0.9 days, which is better than the USA (1.5 days), Australia (1.7 days), Singapore (1.0 days), etc. 6. In F24, ports overall cargo growth was 7 per cent, with 53 per cent of cargo handled by major ports (government-owned).

Prime Minister Narendra Modi launched the PM Gati Shakti National master plan for infrastructure development in October 2021. It brings 16 ministries including Railways and Highways together on a digital platform for integrated planning and coordinated implementation of multi-modal connectivity projects. It is conceived as a transformative approach for economic growth and sustainable development with roads, railways, airports, ports, mass transport, waterways and logistics infrastructure constituting “7 engines ” to pull the economy forward in unison.

According to the Morgan Stanley Report, initiatives under PM Gati Shakti are yielding results. Under the PM Gati Shakti scheme so far, cumulatively 101 projects worth Rs 60,900 crore have been identified for implementation in the ports and shipping sectors.

As of April 2023, 26 projects, worth Rs 8,900 crore have been completed, 42 projects worth Rs 15,340 crore are under development, and 33 projects worth Rs 36,640 crore are under implementation.

The Ministry of Ports, Shipping, and Waterways (MoPSW) is also implementing a comprehensive port connectivity plan in coordination with the highways and railways ministries.

The Morgan Stanley report says under the Sagarmala programme, 220 projects worth Rs 1.12 lakh crore have been completed and 231 projects worth Rs 2.21 lakh crore are under implementation while 351 projects worth Rs 2.07 lakh crore are at the evaluation stage.

Similarly, National Waterways are also being developed as a more efficient and environment-friendly means of transport for both cargo and passengers.
 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

New Delhi:

Global investment bank and financial company Morgan Stanley has stated that the PM Gati Shakti scheme has succeeded in giving a new fillip to India’s infrastructure development and multi-modal connectivity across highways, railways and ports that has spurred economic growth.

According to the report, India has scaled up its infrastructure strongly over the last decade, with higher investment that is also better targeted and potentially more productive.

“We expect India’s infrastructure investment to steadily increase from 5.3 per cent of GDP in FY24 to 6.5 per cent of GDP by FY29. Indeed, this implies that infrastructure investments are expected to register a strong 15.3 per cent CAGR, resulting in cumulative spending of USD 1.45 trillion over the next five years. In our view this will help to lift the investment rate, leading to a sustained period of high productive growth.”

Interestingly, the report also states that “contrary to popular perception, India’s physical infrastructure scale already compares favourably to China’s when viewed in the context of GDP differential.”

The report cites the World Bank’s Logistics Index Report, 2023, which records that the average Container Dwell Time in Indian ports was three days compared to four days for countries like the UAE and South Africa, seven days for the USA, and 10 days for Germany.

Indian Ports “turnaround time” has reached 0.9 days, which is better than the USA (1.5 days), Australia (1.7 days), Singapore (1.0 days), etc. 6. In F24, ports overall cargo growth was 7 per cent, with 53 per cent of cargo handled by major ports (government-owned).

Prime Minister Narendra Modi launched the PM Gati Shakti National master plan for infrastructure development in October 2021. It brings 16 ministries including Railways and Highways together on a digital platform for integrated planning and coordinated implementation of multi-modal connectivity projects. It is conceived as a transformative approach for economic growth and sustainable development with roads, railways, airports, ports, mass transport, waterways and logistics infrastructure constituting “7 engines ” to pull the economy forward in unison.

According to the Morgan Stanley Report, initiatives under PM Gati Shakti are yielding results. Under the PM Gati Shakti scheme so far, cumulatively 101 projects worth Rs 60,900 crore have been identified for implementation in the ports and shipping sectors.

As of April 2023, 26 projects, worth Rs 8,900 crore have been completed, 42 projects worth Rs 15,340 crore are under development, and 33 projects worth Rs 36,640 crore are under implementation.

The Ministry of Ports, Shipping, and Waterways (MoPSW) is also implementing a comprehensive port connectivity plan in coordination with the highways and railways ministries.

The Morgan Stanley report says under the Sagarmala programme, 220 projects worth Rs 1.12 lakh crore have been completed and 231 projects worth Rs 2.21 lakh crore are under implementation while 351 projects worth Rs 2.07 lakh crore are at the evaluation stage.

Similarly, National Waterways are also being developed as a more efficient and environment-friendly means of transport for both cargo and passengers.
 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Mumbai:

Gautam Adani, the Chairman of the Adani Group today listed three key areas which will further help the national infrastructure grow in years to come, driving the country to realise its goal of becoming a $30 trillion economy by 2050.

According to Gautam Adani, touted as ‘The Infra Man of India,’ the three key areas are – the role of government policies and governance in building infrastructure; the future of infrastructure and its interconnection with sustainability; and Adani Group’s areas of focus and the role it is playing in developing national infrastructure.

The 1991 economic liberalisation and reforms, announced by the late Prime Minister PV Narasimha Rao and the finance minister at that time, Dr Manmohan Singh, marked a watershed moment in India’s economic history and dismantled the ‘Licence Raj’ which had seen the government involved in almost every approval that businesses needed.

The statistics tell the story. As per World Bank data: In the three decades prior to liberalisation, the Indian GDP grew by 7 times. And in the three decades post-liberalisation, our GDP grew by 14 times.

“There could be no better validation than these numbers on the power of liberalisation,” Gautam Adani said while delivering the keynote at the Crisil Ratings’ ‘Annual Infrastructure Summit’.

However, the liberalisation in 1991 marked a major turning point. The breaking down of the ‘Licence Raj’ meant that the government did away with industrial licensing for most sectors.

It eliminated much of the requirement for businesses to obtain government permission to invest, or set prices, or build capacity.

“If the period between 1991 and 2014 was about putting down the foundations and building the runway, the period from 2014 to 2024 has been about the aircraft taking off,” Gautam Adani noted.

And a strong example of this ‘take off’ is the National Infrastructure Pipeline, the NIP programme.

The core essence of the NIP is its integrated approach involving participation from both the public and private sectors with the funding model divided between the two.

“I consider the NIP programme that has earmarked a projected investment of Rs 111 lakh crore over the period FY20-25 as a benchmark of how a government can put in place a national view of over 9,000 infrastructure projects across sectors like energy, logistics, water, airports and social infrastructure,” the Adani Group Chairman added.

The single most important catalyst enabling this take-off has been the quality of ‘governance’ that we have witnessed over the past decade, and the metrics speak for themselves.

“India’s fiscal investment has doubled, from 1.6 per cent of GDP to 3.3 per cent of GDP. Corporate Income Tax rates have fallen from 30 per cent to 22 per cent, creating headroom for corporates to invest. And the current account deficit fell from 3.5 per cent of GDP to 0.8 per cent of GDP,” informed Gautam Adani.

These outcomes are fundamentally rooted in this government’s effectiveness in institutionalising policy for transforming our nation’s landscape from one of challenges to one of possibilities.

The results are visible to all.

“First, almost every foreign visitor that I meet these days talks about the extraordinary infrastructure growth they see in India be it the quality of the multi-lane highways, the massive construction projects all over the country, access to ports across the nation’s coastline, the rapid penetration of green energy, a world-class and modern transmission grid, dedicated freight corridors, the quality and access to airports across the country, several new Metro rail networks, and the massive trans-sea links,” according to Gautam Adani.

Second, the Indian government’s Aadhaar and UPI infrastructure has transformed the financial ecosystem in the country.

This system has democratised access to financial services to such an extreme level that it has allowed even the previously unbanked population to participate in the digital economy.

“This has led to the stronger tax collections that we have already started to witness. It has also spurred the growth of fintech companies, streamlined subsidy distribution, and enhanced transparency, contributing significantly to the country’s digital transformation and economic growth,” Gautam Adani emphasised.

And third, is the very visible aspect about the ‘young-ness’ of India that we formally call the ‘demographic dividend’.

India’s median age stands at less than 29 years, while China’s median age today is already at 39.

“What is more remarkable is that even in 2050, India’s median age will be just 39 years. This means that India will be at its peak consumption for at least the next three to four decades. No other nation will have this scale advantage of domestic demand,” said Gautam Adani.

In terms of numbers, estimates show that by the end of FY32, the year India has targeted to become a 10 trillion-dollar economy, the cumulative spend on infrastructure will exceed 2.5 trillion dollars.

“These are all indicative of the potential of India, and I can confidently state that the platform to create totally new market spaces in India is now in place,” said Gautam Adani.

The Adani Group Chairman also spoke about two emerging sectors: infrastructure to enable energy transition and digital infrastructure.

“Let me first expand on the energy transition space. This will fundamentally change the global energy landscape forever. The global transition market was valued at approximately 3 trillion dollars in 2023 and is expected to grow to nearly 6 trillion dollars by 2030, and thereafter double every 10 years till 2050,” informed Gautam Adani.

India aims to install 500 gigawatts of renewable energy capacity by 2030.

“This ambitious target will require annual investments of over 150 billion dollars. The transition to green energy in India is expected to generate millions of new jobs in sectors such as solar and wind, energy storage, hydrogen and its derivatives, EV charging stations, as well as grid infrastructure development,” Gautam Adani stated.

On the ‘digital infrastructure’ space, Gautam Adani said we have now arrived at a world where the AI revolution sits at the core of every digital initiative.

“And at the heart of all this action is the Data Centre, the critical infrastructure needed to power all forms of computational needs, especially AI workloads for machine learning algorithms, natural language processing, computer vision and deep learning”.

“The fact is that the infrastructure required for energy transition and the infrastructure required for digital transformation are now inseparable as the technology sector becomes the largest consumer of the precious green electrons,” Gautam Adani added.

Over the past 30 years, the Adani Group has leveraged these drivers to become the world’s second-largest solar power company; India’s largest airport operator with 25 per cent of passenger traffic and 40 per cent of air cargo; India’s largest Ports & Logistics company with 30 per cent of national market share; India’s largest integrated energy player spanning across generation, transmission & distribution, LNG and LPG terminals, and city gas and piped gas distribution; India’s second largest cement manufacturer; and several other new sectors including metals, petrochemicals, aerospace and defence, super apps, and industrial clouds.

“Nothing holds more potential than the two I have outlined — the energy transition space and the digital infrastructure space. This is why the Adani Group is making massive investments in both these areas,” said Gautam Adani.

“The next decade will see us invest more than $100 billion in the energy transition space and further expand our integrated renewable energy value chain that today already spans the manufacturing of every major component required for green energy generation,” the Adani Group Chairman added.
 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani Group Company.)

United Nations:

The United Nations has revised upwards India’s growth projections for 2024, with the country’s economy now forecast to expand by close to seven per cent this year, mainly driven by strong public investment and resilient private consumption.

The World Economic Situation and Prospects as of mid-2024, released Thursday, said, “India’s economy is forecast to expand by 6.9 per cent in 2024 and 6.6 per cent in 2025, mainly driven by strong public investment and resilient private consumption. Although subdued external demand will continue to weigh on merchandise export growth, pharmaceuticals and chemicals exports are expected to expand strongly.” 

The 6.9 per cent economic growth projections for India in the mid-year update is an upward revision from the 6.2 per cent GDP forecast made by the UN in January this year. The UN World Economic Situation and Prospects (WESP) 2024 report that was launched in January had said that growth in India was projected to reach 6.2 per cent in 2024, amid robust domestic demand and strong growth in the manufacturing and services sectors. 

The projection in January for India’s GDP growth for 2025 remains unchanged at 6.6 per cent in the latest assessment of the economic situation.

The update said that consumer price inflation in India is projected to decelerate from 5.6 per cent in 2023 to 4.5 per cent in 2024, staying within the central bank’s two to six per cent medium-term target range. Similarly, inflation rates in other South Asian countries declined in 2023 and are expected to decelerate further in 2024, ranging from 2.2 per cent in the Maldives to 33.6 per cent in Iran. Despite some moderation, food prices remained elevated in the first quarter of 2024, especially in Bangladesh and India.

In India, labour market indicators have also improved amid robust growth and higher labour force participation, it said. India’s government remains committed to gradually reduce the fiscal deficit, while seeking to increase capital investment.

South Asia’s economic outlook is expected to remain strong, supported by a robust performance of India’s economy and a slight recovery in Pakistan and Sri Lanka. Regional GDP is projected to grow by 5.8 per cent in 2024 (an upward revision of 0.6 percentage points since January) and 5.7 per cent in 2025, below the 6.2 per cent recorded in 2023. However, still tight financial conditions and fiscal and external imbalances will continue to weigh on South Asia’s growth performance. 

In addition, potential increases in energy prices amid geopolitical tensions and the ongoing disruption in the Red Sea pose a risk to the regional economic outlook, it said.

The world economy is now forecast to grow by 2.7 per cent in 2024 (an increase of 0.3 percentage points from the forecast in January) and 2.8 per cent in 2025 (an increase of 0.1 percentage points).

The upward revisions mainly reflect a better outlook in the United States, where the latest forecast points to 2.3 per cent growth in 2024 (an upward revision of 0.9 percentage points since January), and several large emerging economies, notably Brazil, India and Russia.

It noted that several large developing economies – Indonesia, India and Mexico – are benefiting from strong domestic and external demand. In comparison, many economies in Africa and Latin America and the Caribbean are on a low-growth trajectory, facing high inflation, elevated borrowing costs, persistent exchange rate pressures and lingering political instability. The possible intensification and spreading of conflicts in Gaza and the Red Sea add further uncertainties to the near-term outlook for the Middle East, the mid-year update said.

Global trade is expected to recover in 2024. The early boost to trade flows in the first months of the year can be attributed to destocking of the inventory that piled up amid supply-chain disruptions in 2021-22. “China’s foreign trade grew faster than expected in the first two months in 2024, driven largely by exports to emerging markets, particularly to Brazil, India and Russia,” it said.

However, persistent geopolitical tensions in the Middle East and disruptions in the Red Sea, and escalating cost of freight continue to pose challenges to global trade, it added.

The mid-year update said global economic prospects have improved since January, with major economies avoiding a severe downturn, bringing down inflation without increasing unemployment. However, the outlook is only cautiously optimistic. Higher-for-longer interest rates, debt sustainability challenges, continuing geopolitical tensions and ever-worsening climate risks continue to pose challenges to growth, threatening decades of development gains, especially for least developed countries and small island developing states.

The outlook for China registers a small uptick with growth now expected to be 4.8 per cent in 2024, from 4.7 per cent projected in January. China’s growth is projected to moderate to 4.8 per cent in 2024, from 5.2 per cent in 2023. Pent-up consumer demand – released after the lifting of pandemic-related restrictions – has largely dissipated. While enhanced policy support is expected to boost investments in public infrastructure and strategic sectors, the property sector poses a significant downside risk to the Chinese economy, it said.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

The Manufacturing sector Flash PMI stood at 59.1 in April, unchanged from March’s final reading for the index. File
| Photo Credit: Reuters

Combined output from India’s manufacturing and services sectors may have grown at the fastest pace in almost 14 years this month, with the services activity rising to a three-month high, as per the HSBC Flash Purchasing Managers’ Index (PMI) for April.

A spurt in international sales this month is reckoned to have bolstered new order inflows for manufacturing and services firms, with fresh export orders seen to have grown at the fastest pace since September 2014.

The Manufacturing sector Flash PMI stood at 59.1 in April, unchanged from March’s final reading for the index. The Services PMI, which stood at 61.2 in March, rose to 61.7 on the Flash PMI print for this month. A reading of 50 on the PMI indicates no change in activity levels. 

The Flash PMI scores for an ongoing month are based on responses from about 75% to 85% of 800 services and manufacturing players surveyed for the PMI that is available for each month in the first week of the subsequent month. “The composite output index rose at the fastest pace in nearly fourteen years, with the services PMI climbing further in April, led by a surge in new orders,” HSBC economists said in a note.

Mixed signals on hiring

Manufacturing firms accelerated hiring this month while services players slowed down on new job creation, the Flash PMI signalled, even as both sectors reported a dip in input costs. While manufacturers raised output charges, improving their margins this month, Services firms saw operating margins worsen with labour costs spiking. 

“The orders-to-inventory ratio for manufacturers continue to remain above one, albeit moderated slightly in April. Overall business confidence ticked up in April and panellists expect further improvement in demand conditions over the coming year,” HSBC economists Pranjul Bhandari and Maitreyi Das said. 

New Delhi:

India is poised to become a USD 5 trillion economy and the challenge for the country will be to grow at 8-9 per cent for the next three decades, India’s G20 Sherpa Amitabh Kant said on Thursday.

Addressing an event organised by Public Affairs Forum of India (PAFI) New Delhi, Amitabh Kant said India’s economy can’t grow at higher rates without the support of the private sector.

“This is India’s moment. India is poised to become a USD 5 trillion economy,” he said, adding that the government has pushed the limit on infrastructure.

“The challenge (for India) is to grow at 8-9 per cent for three decades,” he said. Pointing out that presently the size of China’s economy is five times of India, Amitabh Kant said, “To catch up with China, we will have to grow at 10 per cent.” Asserting that the quality of Indian airports is better than those in Europe, he said, “Our domestic airlines are also much better than international airlines.” India’s growth story will remain intact, he said, while emphasising on the need to use Artificial Intelligence (AI) to bring sustainable growth.

“You can’t make technology leapfrog without using AI,” he said.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Jayanth R. Varma said while external demand is weak due to the sluggishness in the world economy, the revival in private capital expenditure is still too tentative and muted.

RBI MPC member Jayanth R. Varma on October 24 said that he is ‘little more’ optimistic about India’s economic growth than a few months ago, though concerns remain as the country is now ‘disproportionately’ dependent on household spending with other components of demand encountering headwinds.

Mr. Varma further said that India should be willing to accept inflation between 4% and 5% for several quarters as the price of avoiding a growth shock.

“I am a little more optimistic about growth than I was 2-4 months ago. My cautious optimism stems from improved consumer confidence and various indicators that point to the continuation of the growth momentum,” he told PTI in a telephonic interview.

While keeping the global growth projection for FY24 unchanged at 3%, the International Monetary Fund (IMF) recently revised its growth projection for India upwards by 20 basis points to 6.3% in October.

“However, the outlook remains fragile because demand is now disproportionately dependent on household spending with other components of demand encountering headwinds,” the eminent economist emphasised.

Explaining further, the Monetary Policy Committee (MPC) member said while external demand is weak due to the sluggishness in the world economy, the revival in private capital expenditure is still too tentative and muted.

“Fiscal consolidation amounts to a withdrawal of the pandemic era government spending stimulus,” Varma, currently a professor at the Indian Institute of Management, Ahmedabad noted.

India’s GDP growth in 2022-23 was 7.2%, lower than 9.1% in 2021-22.

According to the Reserve Bank of India’s projections, India’s GDP is likely to grow at 6.5% in the current fiscal year.

Asked when inflation will fall back to the RBI’s target of 4%, Mr. Varma said August inflation was high, but September inflation is within the band and October inflation is also expected to be low.

Pointing out that India has been experiencing a lot of volatility in commodity and food prices over the last couple of years, he said in this context, a sharp rise or drop in inflation in one or two months does not mean anything.

“I am confident that we will achieve this goal, but I think it will take a few more quarters… We should be willing to accept inflation between 4% and 5% for several quarters as the price of avoiding a growth shock,” Mr. Varma said.

The eminent economist noted that a more rapid pace of reduction could impose an intolerable growth sacrifice.

Annual retail inflation, called CPI or consumer price index, rose 5.02 per cent in September from 6.83% in the previous month on the back of softer vegetable prices.

Recently, Reserve Bank of India Governor Shaktikanta Das has said that the fundamental goal of the monetary policy is to align inflation with the 4% target and anchor inflation expectations.

RBI MPC in its last meeting earlier in the month, decided to keep the benchmark lending rate at 6.5 per cent, for the fourth time in a row, in a bid to keep retail inflation under check.

Responding to a question on the implication of high crude oil prices on the government’s subsidy figure and inflation, Mr. Varma stressed that there is no question that the conflicts in the Middle East pose risks to the world economy.

“What I find reassuring is that oil prices have remained range-bound in the face of these conflicts,” he said, adding this is in his view suggestive of depressed global demand putting a lid on prices.

Mr. Varma, however, warned that of course, a bigger flare up in the region that takes us back to 1973 would be a very different situation, but as of now there is ground for guarded optimism.

“These conflicts would slow the fall in inflation but would not reverse its decline,” he opined. The Israeli military has been carrying out retaliatory air strikes on Gaza following the unprecedented attack on Israel on October 7 by Hamas.

New Delhi:

Moody’s Investors Service today raised India’s growth projection for 2023 calendar year to 6.7 per cent on account of robust economic momentum.

“Strong services expansion and capital expenditures propelled India’s 7.8 per cent real GDP growth in the second (April-June) quarter from a year ago. We have accordingly raised our 2023 calendar year growth forecast for India from 5.5 per cent to 6.7 per cent,” Moody’s said in its Global Macro Outlook.

“Given the robust underlying economic momentum, we also recognise further upside risk to India’s economic growth performance,” it added Moody’s said since the second quarter outperformance creates a high base in 2023, “we have lowered our 2024 growth forecast from 6.5 per cent to 6.1 per cent”.

India’s monsoon season which runs from June to October could also see below average rainfall, resulting in higher food prices. So far, as of August 29, the India Meteorological Department has estimated a 9 per cent rain deficiency across the country.

If El Nino this year proves to be particularly strong in the second half of 2023 and early 2024, agricultural commodity prices could shoot up, Moody’s added.

The Reserve Bank of India’s monetary policy committee left the repo rate unchanged for a third time in August. The recent uptick in food price inflation and uncertain El Nino-related weather conditions will delay monetary policy easing consideration to early next year.

“Domestic demand in India remains buoyant, and as long as core inflation remains relatively stable, rate hikes are also unlikely,” Moody’s said.