RBI may cut estimate for growth; rate hike likely

RBI may cut estimate for growth; rate hike likely

Tamal Bandyopadhyay

The growth projection will probably be cut to 7.5% from 8%, and none, including Union finance minister Pranab Mukherjee, will be surprised by that. In fact, at the economic editors’ conference last week in Delhi, Mukherjee himself admitted that the growth projection outlined in the February budget would be difficult to achieve. There were also hints that the government will find it extremely challenging to meet the fiscal deficit target— 4.6% of gross domestic product. (Click here to read full column)

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Setting the stage for RBI | ( Graphic )

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Rate hike will be a mistake

Richard Iley

Richard Iley

But the economy now stands at a crossroads, with the risks to growth and inflation evolving rapidly. The euro zone debt crisis and renewed fears over the health of the US economy have soured the external environment while a swathe of indicators signal the domestic economy is slowing rapidly. Inflation, for now at least, however, remains uncomfortably elevated, with the September wholesale price data still hovering close to double-digit territory. (Click hereto read full column)

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A different BRIIC in the wall?

Leif Eskesen

Taking an India-centric perspective, there is no need to cut rates but rather a need to tighten. Why? Simple. The inflation problem in India is more severe and, except for maybe Indonesia, the economy is more domestically oriented, leaving it somewhat more insulated against adverse global economic spillovers. While RBI is getting closer to the end of the tightening cycle, we do not think they are quite done yet. Here is why. (Click here to read full column)

Leif Eskesen, chief economist HSBC (India and Asean)

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Rising rates cause for high inflation

Siddhartha Roy

This commentary is being written at a time when we are faced with the prospect of lower growth, persistent inflation, higher interest rates and a weak rupee.

Siddhartha Roy is Economic advisor, Tata group

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RBI may hold fire after 25 bps hike

A. Prasanna

On the other hand, some growth indicators have started worsening at a faster pace than was initially anticipated by RBI and the government. Though industrial production data appears to be riddled with inconsistencies, the trend in manufacturing output growth is indisputably slower. (Click here to read full column)

A. Prasanna is the chief economist at ICICI Securities Primary Dealership Ltd

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Reuters Poll | RBI rate hike on the cards, say analysts

A file photo of RBI governor Duvvuri Subbarao. Photo: Bloomberg

Of those polled, 17 expect the RBI to increase the key lending rate by 25 basis points on 25 October, while 13 expect it to hold the rate.

The median forecast is roughly in line with estimates in a smaller poll conducted immediately after the RBI raised rates in mid-September and indicated more was to follow. Since then, global and domestic indicators have pointed to weakening economic conditions. (Click here to read full story)

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Slowdown fear grips industry as RBI policy meeting looms

Dinesh Unnikrishnan & Joel Rebello

Firms are resisting RBI action, arguing that it could further damage the already weak investor sentiment, create a roadblock for ongoing projects and stymie job creation. Bankers, too, are against any further increase because it could hurt their margins and result in more bad loans in the industry, already burdened with multiple loan recasts and slow loan growth. (Click here to read full story)

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Balancing growth and inflation

Samiran Chakraborty

Samiran Chakraborty is head of research, Standard Chartered India