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INDIA:  RBI Positive on Growth Outlook in Monthly Bulletin. 

INDIA
IndiaEM BulletBulletAPACEmerging Market News

 

  • In it’s monthly bulletin released yesterday the Reserve Bank of India (“RBI”) described global growth as ‘steady’ highlighting concerns as to the pace of moderation of inflation and the looming threat of tariffs.
  • The RBI gave a nod to the pressures felt in Emerging Markets for investment outflows and the impact the dollar is having on their currency.
  • The RBI indicated that their ‘high frequency indicators’ are pointing to ‘a sequential pick up in momentum of economic activity during the first half’ and is in their belief likely to be sustained going forward.
  • The bulletin describes the government’s recently released budget as ‘prudent’ in its balance of fiscal consolidation versus the government's growth objectives via the focus on capex and boosts to household consumption.
  • The bulletin provides a useful summary of the budget details with the key highlights being:
    • Deficit to 4.4% of GDP
    • Overall expenditure to grow 6.7% in 2025-26 with capex up by 4.3%.
    • Tax revenue growth of 10.8%.
    • Confirmation that the government commits to a debt-to-GDP ratio of 50% +/- 1% by 2030-31.
  • With the RBI surprising markets last year with a cut in the Cash Reserve Ratio to support liquidity, the monthly bulletin’s section on liquidity was a key focus; pointing out that system liquidity has been in deficit since December.  The RBI has reacted to this with the introduction of daily variable rate repo auctions to support interbank liquidity, the use of FX swaps (in lieu of reserves) and outright market purchases of government bonds.
  • The conclusion provides insight as to the thinking for monetary policy suggesting that the outlook for the global economy is being shaped by trade-related policies, highlighting concerns they could push inflation higher and accelerate capital outflows.
  • The next data release for CPI is the February release on March 12.
  • The RBI next meets on April 9. 
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  • In it’s monthly bulletin released yesterday the Reserve Bank of India (“RBI”) described global growth as ‘steady’ highlighting concerns as to the pace of moderation of inflation and the looming threat of tariffs.
  • The RBI gave a nod to the pressures felt in Emerging Markets for investment outflows and the impact the dollar is having on their currency.
  • The RBI indicated that their ‘high frequency indicators’ are pointing to ‘a sequential pick up in momentum of economic activity during the first half’ and is in their belief likely to be sustained going forward.
  • The bulletin describes the government’s recently released budget as ‘prudent’ in its balance of fiscal consolidation versus the government's growth objectives via the focus on capex and boosts to household consumption.
  • The bulletin provides a useful summary of the budget details with the key highlights being:
    • Deficit to 4.4% of GDP
    • Overall expenditure to grow 6.7% in 2025-26 with capex up by 4.3%.
    • Tax revenue growth of 10.8%.
    • Confirmation that the government commits to a debt-to-GDP ratio of 50% +/- 1% by 2030-31.
  • With the RBI surprising markets last year with a cut in the Cash Reserve Ratio to support liquidity, the monthly bulletin’s section on liquidity was a key focus; pointing out that system liquidity has been in deficit since December.  The RBI has reacted to this with the introduction of daily variable rate repo auctions to support interbank liquidity, the use of FX swaps (in lieu of reserves) and outright market purchases of government bonds.
  • The conclusion provides insight as to the thinking for monetary policy suggesting that the outlook for the global economy is being shaped by trade-related policies, highlighting concerns they could push inflation higher and accelerate capital outflows.
  • The next data release for CPI is the February release on March 12.
  • The RBI next meets on April 9.