Slowdown in global growth to hurt India's domestic outputs: RBI report
Live Events
(You can now subscribe to our
(You can now subscribe to our Economic Times WhatsApp channel
A deceleration in global growth will act as a drag on domestic output. It is estimated that a 100 basis points (bps one bps is 0.01%) slowdown in global growth can pull down India's growth by 30 bps, the FSR said.The headwinds from protracted geopolitical tensions, elevated uncertainty and trade disruptions, and weather-related uncertainty pose downside risks to growth. ' External spillovers and weather-related events could pose downside risks to growth' said governor Sanjay Malhotra, in the Foreword to the latest Financial Stability Report (FSR) .Overall, while the broader financial system remains resilient, there is some build-up of stress primarily in financial markets on account of global spillovers. This is reflected in the marginal rise in the financial system stress indicator (FSSI), an indicator of the stress level in the Indian financial system, compared to its position in H1:2024-25, the report saidThe outlook for food inflation remains favourable on account of softening prices and robust crop production. Moreover, the risk of imported inflation largely remains low with the anticipated slowdown in global growth likely to soften commodity and crude oil prices, although the recent escalation of geopolitical tensions in the Middle East has led to heightened uncertainty, the report said.The near-term and medium-term outlook gives greater confidence of a durable alignment of headline inflation with the target of 4%, and it is likely to undershoot the target at the margin as per the projections of the RBI, according to the FSR. ' The outlook for inflation, on the other hand, is benign and there is greater confidence in the durable alignment of inflation with the Reserve Bank's target.' said Malhotra.The resilience of the external sector has been a key contributing factor to India's macroeconomic and financial stability. Current account deficit (CAD) at 0.6 % of GDP during 2024-25 remains eminently manageable, supported by sustained buoyancy in services exports and remittances. Moreover, current account balance turned into a surplus of 1.3% of GDP during January-March 2024-25.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
23 minutes ago
- Economic Times
Royal train's journey ends after 156 years as King Charles III seeks to cut costs
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel The 156-year-long journey for the royal family 's private 'royal train' is set to come to an end after King Charles decided to scrap it in a bid to reduce costs. The decision taken by Buckingham Palace to decommission Britain's royal train , a service dating back to Queen Victoria, comes as maintenance and storage were getting costlier by the King Charles' great-great-great-grandmother, commissioned the first royal rail carriages back in 1869. The Royal Family will still travel on regular train services. According to the BBC, the annual report revealed that 141 helicopter trips were taken in 2024, costing £475,000 ($652,348).According to Reuters, the latest incarnation is made up of nine carriages, the most recent of them added in 1986. The royal train was used just twice during the financial year 2024-25, with the two journeys together costing almost 80,000 pounds ($109,869).Speaking on the end of the royal train, James Chalmers, the king's treasurer, said the monarch had now agreed that the train, which critics had long said was a waste of money, would reach the end of the line in 2027."The royal train has ... been a part of national life for many decades, loved and cared for by all those involved, but in moving forward we must not be bound by the past," Chalmers, officially known as the Keeper of the Privy Purse, told reporters."The time has come to bid the fondest of farewells, as we seek to be disciplined and forward-looking in our allocation of funding." While the king had fond memories of the train, palace officials said it would require significant funds to pay for its long-term use, although it was not clear how much scrapping it would announcement came as Chalmers, on Monday, June 30, 2025, unveiled the annual report of the Sovereign Grant, the government handout that covers staffing costs, upkeep of royal palaces, and travel expenses and is currently set at 12% of the profit from the Crown Estate, a property portfolio belonging to the November 2024, the Sunday Times and a TV documentary accused Charles and his elder son, Prince William, of making millions from the country's health service, army, and schools from charges imposed by the monarch's Duchy of Lancaster estate and the heir's Duchy of Cornwall Bax, the chief executive of the Duchy of Cornwall, acknowledged that criticism as he detailed its annual report on Monday, saying they were making changes at a time of "reflection and evolution." Bax said they intended to end or reduce rents charged to some community groups and charities, while the report showed William's personal income from the Duchy had fallen slightly to just under 23 million said the annual reports were misleading, claiming that the monarchy's price tag amounts to more than half a billion pounds. "The cost of the monarchy is out of control, and these reports receive almost no political scrutiny," Graham Smith, chief executive of campaign group Republic, said the global significance of the royals could not be underestimated, citing a Global Perceptions Survey that found the monarchy the single biggest influence on perceptions of the UK among international audiences.
Economic Times
23 minutes ago
- Economic Times
Understanding household debt trends: Consumption vs. Asset Building
Mumbai: The individual household sector presents a mixed bag in terms of the indebtedness pattern. About 55% of the household debt is meant for consumption purposes rather than for building assets and these are steadily growing, the latest Financial Stability Report (FSR) said. Significantly only 29% of the loans were housing loans, but about a third was from existing borrowers. ADVERTISEMENT From the financial stability perspective, more than 50% of loans are to the prime and above-rated borrowers. Only 22% of borrowers are from the sub-prime category where stress is building up. On the positive side though monetary easing by the central bank is expected to lower the debt servicing burden. At an aggregate level, the per capita debt of individual borrowers has grown from ₹3.9 lakh in March 2023 to ₹4.8 lakh in March 2025. The rise in per capita debt has been mainly led by the higher-rated borrowers, it said. "Among broad categories of household debt, non-housing retail loans, which are mostly used for consumption purposes, formed 54.9% of total household debt as of March 2025 and 25.7 % of disposable income as of March 2024," noted the FSR. "Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans." Housing loans, on the other hand, formed 29% of household debt and their growth has been steady. However, disaggregated data shows that existing borrowers are availing more loans rather than new borrowers coming into the borrowing-fold. Significantly, the share of borrower accounts with loan to value higher than 70% is rising. But at the same time the report noted that delinquency levels are higher for lower-rated and more leveraged borrowers. However, these have declined considerably from their levels during Covid-19, it share of better-rated customers (prime and above) among total borrowers is growing, both in terms of the outstanding amount and number of borrowers. (You can now subscribe to our ETMarkets WhatsApp channel)
Mint
25 minutes ago
- Mint
India bonds to see a muted start to quarter
MUMBAI, July 1 (Reuters) - Indian government bonds are expected to have a muted start to the quarter on Tuesday, as investors would await fresh cues after yields crept up in June, breaking a three-month declining streak. The yield on the benchmark 10-year bond is expected to trade between 6.31% and 6.33%, a trader at a private bank said, after closing at 6.3241% in the previous session. The five-year 6.75% 2029 bond ended at 6.0013% on Monday. Shorter-duration bonds outperformed their longer-duration counterparts for a second straight quarter in April-June, with the five-year bond yield plunging by 45 basis points, outpacing the 10-year bond yield that fell 26 bps. "Whatever we witnessed in April-June is definitely not going to be repeated, as the scenario has completely changed and the Reserve Bank of India has moved to liquidity withdrawal mode, instead of infusion," the trader said. The RBI conducted a seven-day variable rate reverse repo on Friday, withdrawing 850 billion rupees ($9.9 billion) from the banking system which contributed to pushing up overnight rates. The focus would remain on any follow-up action from the central bank this week, which will give more clarity on its comfort with liquidity and rates. Demand may also remain impacted as the government did not announce a tweak to the debt supply pattern, which some investors had anticipated. Indian states aim to borrow 2.87 trillion rupees through sale of bonds in this quarter, lower than the around 3 trillion rupees the market had expected. States sold more than 2 trillion rupees of bonds in April-June. RATES India's overnight index swap rates are likely to remain stable on Tuesday after declining in the previous quarter. The one-year OIS rate dropped 50 bps in April-June to 5.54%, while the two-year OIS rate declined 33 bps to 5.51%. The liquid five-year was at 5.71%, down 20 bps. KEY INDICATORS: ** Brent crude futures were 1.8% lower at $66.40 per barrel after easing 0.2% in the previous session ** Ten-year U.S. Treasury yield at 4.2163%; two-year yield at 3.7233% ** Indian states aim to raise 181 billion rupees via sale of bonds ($1 = 85.6610 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Ronojoy Mazumdar)
