Monday, July 30, 2012

>Macroeconomic Backdrop –Q1 FY13

The RBI is scheduled to conduct its First Quarter Monetary Policy Review on July 31, 2012 and the prevailing macroeconomic conditions are expected to dictate its policy stance with regard to interest rates. Accordingly, this update covers the performance of the Indian economy in FY13 so far in the domestic and external sector.
Domestic Macro-economy

Continuing with lacklustre performance of the last year, industrial production remained subdued in the first two months of FY13; weighed down by negative growth in mining (April and May) and manufacturing (April for entire sector and capital goods in both months) and moderation in productive activity in electricity sector.

The slowdown in industrial activity is due a combination of factors of low consumer, investment and government demand which has been driven partly by a policy of high interest rates to control inflation. While core inflation has moderated to around 5% (from a peak of 8.2% (November 2011) in the last fifteen months), overall inflation continues to remain high with food inflation moving back into double-digits.

To read report in detail: MACROECONOMIC BACKDROP