Expert Zone
Straight from the Specialists
Decoding Subbarao’s signals
(Any opinions expressed here are those of the author and not of Thomson Reuters)
When Reserve Bank of India (RBI) governor Duvvuri Subbarao announced last week that the central bank was cutting its policy interest rate for the third time this year, he also made a statement that may well have been directed as much to watchers of the Indian economy as to its managers. His message to the government, originally coded in technocratic diplomacy: It’s time for you to do your share in reviving growth.
Financial markets had widely anticipated the RBI would cut its repo rate by 25 basis points (bps). However, they also expected its policy guidance to adopt a less hawkish tone than in the two prior cuts. After all, inflation had continued to ease and the economy still needs all the support it can get to come back on the growth path. Instead, Subbarao was categorical in saying that the “growth-inflation dynamic yields little space for further monetary easing.”
The statement stood out all the more because it came around the same time that the world’s largest central banks made their easing biases more obvious: the European Central Bank cut its policy rate; the Bank of Japan reaffirmed its commitment to monetary expansion; and the Federal Reserve stood ready to adjust its bond-buying program as conditions demanded. In short, global central banks remain willing to loosen the flow of money to stimulate growth.
So why the hawkish talk from Subbarao? We suspect several factors were at work. The first was pretty clear: the RBI remains mindful of India’s current-account deficit. While prices of gold and crude oil have declined significantly in the last few months – helping rein in the country’s expenditure for its two most crucial imports – the RBI acknowledged that “it cannot afford to lower its guard” against the possibility of an upward price pressure.
The battle for patent protection
(Any opinions expressed here are those of the author and not necessarily of Reuters)
The Supreme Court verdict on Glivec brought to an end the battle by Swiss drugmaker Novartis to exclusively market the cancer medicine. In doing so, the bench enunciated a principle to justify a patent only by its intrinsic worth of innovation.
India’s privy purses and the Cyprus deal
(Rajan Ghotgalkar is Managing Director of Principal Pnb Asset Management Company. The views expressed in this column are his own and do not represent those of either Principal Pnb or Reuters)
When the Indian republic took shape, the erstwhile maharajas and princes were granted privy purses. These were allowances which varied based on the size of their state and the revenue it generated.
Low-key outcome as Singh meets Xi on BRICS sidelines
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The BRICS summit in Durban last week, which brought the leaders of Brazil, Russia, India, China and South Africa together, is best recalled for the rich visual imagery that Russian President Vladimir Putin invoked. Putin suggested that the five countries were like the lion, elephant, buffalo, leopard and rhinoceros. Notwithstanding the normative vision for the developing world that was outlined by the leaders, the subtext is a logical extension of this animal metaphor.
India’s IP growing pains
(Any opinions expressed here are those of the author and not of Reuters)
As it celebrates its 65th year as an independent country, India seems poised for an economic take-off. Already, this south Asian country is the world’s largest democracy, has about the same number of middle-class citizens as the United States, and has the planet’s tenth largest economy.
But India still has a long way to go. An average citizen lives on less than $10 a day and its per-capita gross domestic product is less than half that of the other Asian giant, China. For India, moving to the next level is going to require a potentially painful but absolutely necessary engagement with the global economy.
Budget 2013: A rather ambitious budget
(Rajan Ghotgalkar is Managing Director of Principal Pnb Asset Management Company. The views expressed in this column are his own and do not represent those of either Principal Pnb or Reuters)
Rating agencies have left India’s sovereign rating unchanged after the 2013 Budget. A rating downgrade would mean India getting junk status which is certainly not something one would want when the current account deficit is widening.
Budget 2013: Chidambaram’s chance to bell the cat
(Any opinions expressed here are those of the author and not of Reuters)
This year’s budget will be an interesting one and it will hopefully be more pragmatic than populist.
Not much has changed since Pranab Mukherjee presented the budget in 2012. At the time, India was battling high inflation at 9 percent, fiscal deficit at 5.9 percent of GDP and a current account deficit (CAD) at 4.2 percent of GDP.
India Markets Weekahead – Opportunity for those who missed out rally
(Any opinions expressed here are those of the author, and not necessarily of Thomson Reuters)
It was a second straight week of losses of 1.59 percent with the Nifty closing at 5,903. As discussed in this column a fortnight back, we are in a phase which would tire out the participants and change the mood to a negative consensus on the street.
India Markets Weekahead – Still time to tank up for a pre-budget rally
(Any opinions expressed here are those of the author, and not necessarily of Thomson Reuters)
The Nifty has crossed 6,000 levels while the Sensex breached the psychological barrier of 20,000 to touch a two-year high — triggered by an overdrive of government action, encouraging macro numbers, corporate results and no bad news internationally.
India Markets Weekahead – Company results key for market direction
(Any opinions expressed here are those of the author, and not necessarily of Thomson Reuters)
Infosys stumped Indian markets again but for a change — positively. Recent management comments had built expectations of underperformance which led to cautious to negative views on the stock. Institutional investors were light on Infosys whereas the more adventurous speculators were short. And we were all caught on the wrong foot when the company declared a revenue growth as well as a net profit much better than consensus expectations.
