Latest news with #SachchidanandShukla
India Today
3 days ago
- Business
- India Today
Retail inflation eases to 8-year low of 1.55% in July
Retail inflation eased sharply to 1.55% in July 2025, marking its lowest level since July 2017, according to provisional data released by the government. The drop represents a big decline of 55 basis points compared to June's 2.10%.Food inflation showed an even steeper drop, falling to -1.76% in July from the previous month, the lowest since January 2019. Both rural and urban areas experienced deflation in food prices, with rural food inflation at -1.74% and urban at -1.90%.The decline in overall inflation is largely attributed to favourable base effects and falling prices in key categories such as pulses, vegetables, cereals, transport and communication, education, eggs, and sugar and headline inflation fell to 1.18% in July from 1.72% in June, while urban inflation eased from 2.56% to 2.05%. Food inflation also declined sharply in both rural and urban categories showed mixed trends: housing inflation remained stable at around 3.17%, education inflation eased to 4.00%, and health inflation rose slightly to 4.57%. Transport and communication inflation dropped significantly to 2.12%, while fuel and light inflation edged up marginally to 2.67%.'The ninth straight fall in CPI might just have signaled the bottoming of inflation. While the low base will ensure a few more benign readings in the coming months, the point to keep in mind from policy perspective is that exit inflation for FY26 i.e., in March 2026, would be 3X higher from here," Sachchidanand Shukla, Group Chief Economist at Larsen & Toubro, told news agency ReutersThe news agency also quoted Sakshi Gupta, Principal Economist at HDFC Bank, who said, 'Inflation moderated below 2% as the disinflation in food continued. The inflation print was broadly in line with expectations and does not change the outlook on monetary policy as the RBI lowered inflation forecast for the year in its August policy. If tariff rates for India are closer to 25% or higher, the space for another rate cut in October could open up.'advertisement(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends
Mint
22-06-2025
- Business
- Mint
US strike on Iran raises oil shock, capital flow risks for India's economy
New Delhi: The flare-up in West Asia following US missile strikes on Iran's nuclear facilities has heightened geopolitical tensions and intensified external risks to India's economy, even as many analysts say the escalation may prove short-lived. At stake for India is the potential fallout from surging oil prices, a widening current account deficit, higher energy and shipping costs fuelling domestic inflation, investor risk aversion, capital outflows, and broader risks to economic growth. 'The bigger impact will be on sentiment. However, oil intensity has been going down structurally. For India too, the share of oil imports in total imports has come down from 21% in 2018 to 16.5% in 2025," said Sachchidanand Shukla, group chief economist at Larsen & Toubro. Read this | Mint Primer: What if the US joins Israel's war with Iran? Shukla added that India can absorb oil prices up to $85 a barrel without triggering large macro imbalances. 'There is no need to panic and one needs to keep an eye on how the situation evolves," he said. In a televised address on Sunday (India time), US President Donald Trump confirmed the direct American assault on Iran's nuclear programme, ending days of speculation about Washington's entry into the Israel-Iran conflict. He warned that further strikes could follow. 'Remember, there are many targets left. Tonight was the most difficult of them all by far, and perhaps the most lethal. But if peace doesn't come quickly we will go to those other targets with precision, speed and skill," Trump said. Oil price spike the immediate risk A sustained rise in oil prices remains the most visible risk for India, which relies on imports for nearly 85% of its crude oil needs. Higher global prices can widen India's current account deficit, fuel domestic inflation, trigger risk aversion among investors, and slow down growth. 'Every sustained 10% rise in oil price versus the baseline can lower India's GDP by 15 basis points (bps) and raise inflation measured by Consumer Price Index (CPI) by 30bps. On the other hand, it can reduce global GDP by 15 bps and raise CPI by 40 bps which can impede the rate cut trajectory," explained Shukla. While crude prices have already risen from $64–65 per barrel to $74–75 since the Israel-Iran conflict erupted on 13 June, some offsetting factors remain in play. Read this | US attack on Iranian nuclear sites roils oil market, India braces for possible price surge Experts noted that oil supply from the Organization of the Petroleum Exporting Countries Plus (Opec+) is improving as members unwind voluntary production cuts. Crude output from Opec+ rose by 180,000 barrels per day in May compared to April, according to the cartel's latest monthly oil market report. This production rebound, experts said, could help cap sharp price spikes, provided the conflict does not escalate further. 'The current flare-up may be short-lived and could even mark a turning point in the West Asia crisis towards its early closure, given the substantial disparity in conventional military capabilities, though the complex regional dynamics suggest multiple pathways for conflict evolution," said Rishi Shah, Partner and Economic Advisory Services Leader, Grant Thornton Bharat. 'As things stand today, there may be regional disturbances but these appear unlikely to translate into a major negative shock for India's economy," said Shah. On the trade front, while treaty negotiations continue, commercial flows seem to be adapting and progressing despite the tensions, he added. "Therefore, based on current developments and assuming the conflict remains contained, we expect the net external impact on India's growth trajectory to be relatively muted in the near term — though this assessment remains contingent on the conflict not escalating significantly or disrupting critical energy supply routes," said Shah. Prolonged conflict could hit growth Economists warn that a prolonged conflict could have deeper consequences. 'For oil-importing countries like India, this means slightly higher inflation and increased fiscal costs. While we have some buffer, with inflation currently below 4%, expectations have suddenly firmed up," said NR Bhanumurthy, director of the Madras School of Economics. Bhanumurthy cautioned that the current account deficit could widen not just due to the oil import bill, but also from potential pressure on remittances and capital flows. 'CAD will be a key concern going forward," he said, adding that fiscal support may be needed to absorb part of the oil price shock. 'A sustained flare-up in the conflict poses upside risks for estimates of crude oil prices, and India's net oil imports and the current account deficit. A $10/bbl increase in the average price of crude oil for the fiscal will typically push up net oil imports by ~$13-14 billion during the year, enlarging the CAD (current account deficit) by 0.3% of GDP," rating agency Icra Ltd had noted in an earlier report. Oil marketing companies and the government can absorb some of the costs in the short term, Bhanumurthy said. 'There will be fiscal implications, but we do have some fiscal space as we have exceeded fiscal targets in the last two years," he added. A sharp oil price rise could also weigh on foreign inflows and hurt domestic investment sentiment, he warned. A similar note of caution was sounded by Madan Sabnavis, chief economist at Bank of Baroda, who said that if crude prices stay above $80 for long, the trade deficit will widen and the rupee will come under pressure. "Wholesale inflation will rise accordingly, but the impact on retail inflation will depend on how the government manages fuel prices," he said, adding that excise cuts, if implemented to shield consumers, would widen the fiscal deficit — 'one that can be absorbed." India's current account deficit edged up to $11.5 billion, or 1.1% of GDP, in Q3 FY25 compared to $10.4 billion a year earlier. Retail inflation eased to 2.82% in May, while wholesale price inflation fell to a 14-month low of 0.39%. Icra Ratings on Friday warned that oil is expected to average between $70 and $80 per barrel in FY26, and any sustained rise beyond current levels could weigh on India's growth outlook. Shipping watches Hormuz chokepoint The Strait of Hormuz remains a key chokepoint for global energy and container trade, with Indian shipping companies monitoring the situation closely. 'But operations and movement of ships as of now has remained unaffected in the region. We have not yet received any alerts from either UK Maritime Trade Operations that patrols the area or the Indian Directorate General of Shipping," said Anil Devli, CEO, Indian National Shipowners' Association. Even before the latest flare-up, some ships had begun avoiding the strait, pushing up freight rates and crew costs amid rising security risks. Read this | Mint Explainer | Strait of Hormuz: Will Iran shut the vital oil artery of the world? Any blockade could spike global energy prices, disrupt supply chains, and hit container trade across the Persian Gulf, South Asia, and East Africa. India is also watching its strategic asset in the region — Chabahar Port in Iran — closely. 'Operations at the port, located near Iran's southeastern border with Pakistan, remain unaffected and normal," an India Ports Global Ltd official said. Meanwhile, Adani Group's Haifa Port in Israel remains fully functional despite the ongoing conflict. 'Earlier strikes caused minor shrapnel damage nearby, but operations were unaffected," another official said. Haifa handles over 30% of Israel's imports and contributes about 5% to Adani Ports' revenue, though it accounts for less than 2% of cargo volumes. Rice exporters brace for fallouts Beyond oil, India's basmati rice exporters are facing uncertainty as Iran, a key buyer, may scale back purchases if tensions persist. Iran typically imports around 1 million tonnes of basmati rice annually from India, accounting for roughly a fifth of India's total basmati exports by volume. Several shipments are currently lying at Indian ports, with exporters hesitant to dispatch consignments amid growing uncertainty. "We are in a catch-22 situation. Amid escalation of tension, many of the exporters, whose shipments are lying at port have kept shipments on hold. If the current situation persists, exporters would be on the receiving end," said Satish Goel, President, All India Rice Exporters Association (AIREA). India's rice exports to Iran rose to $757.3 million in FY25 from $689.8 million a year earlier, accounting for three-fourths of India's total farm exports to the country. Also read | Javier Blas: An Israel-Iran war may not rattle the oil market The timing makes the situation especially sensitive — mid-June to mid-July is peak season for exports, just ahead of Iran's domestic harvest. 'This is a peak season, as in the middle of July Iran might temporarily ban shipments to protect their domestic farmers and ensure fair prices for their harvest," Goel added. 'This is a common practice, particularly during the harvest season, and is aimed at supporting local agriculture by reducing competition from foreign imports. The ban is usually lifted once the domestic harvest is sold." Vijay C Roy and Dhirendra Kumar contributed to this story
Time of India
27-05-2025
- Business
- Time of India
India's economy may overtake Japan soon, but with caveats
India is set to become the world's fourth-largest economy by the end of 2025 (FY 2025-26), according to the International Monetary Fund's (IMF) World Economic Outlook (WEO) report released in April. A few years ago, India overtook the United Kingdom to become the fifth largest, and is now well on its way to rise to the fourth spot in the list of the top 10 largest economies in the world by overtaking Japan. In just 11 years, India has surged from the world's 10th to the 4th largest economy — a remarkable trajectory driven by sustained growth and strategic reforms under the NDA government. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 이미지로 기억하면 영어가 쉬워진다! 40분 특강 무료 공개 스티븐영어 지금 시작하기 Undo ALSO READ: India to become 4th largest economy by end of 2025: NITI Member Arvind Virmani India's growth numbers have triggered premature celebrations, as there is more to it than meets the eye. Live Events India is set to become the world's fourth-largest economy this year, but with the world's largest population, its per capita GDP remains strikingly low at just $2,880, according to the IMF — far behind China's $13,690 and Japan's $33,960. Gross Domestic Product (GDP) per capita is a key economic indicator that measures the average economic output (or income) per person in a country. Economists use GDP per capita to determine the prosperity of countries based on their economic growth. India doesn't even rank in the top 100 countries when it comes to GDP per capita, not even in the Purchasing Power Parity or PPP rankings. A large population (1.4 billion) dilutes the gains of the GDP doubling. Also, informal employment ( approximately 90% of workforce) and low female workforce participation (26% vs. global 47%) limit per capita gains, says Sachchidanand Shukla. Still, the per capita income has close to doubled over the last 10 years. 'That is keeping pace with the overall GDP growth as the population growth is slowing down with fertility rates going close to the replacement rate of 2.2. However, there are regional disparities owing to differential population growth rates as well as the pace of economic development,' says Ranen Banerjee. The brighter picture in 5 points: In 2025, India will become the 4th largest economy in the world, in nominal GDP terms, overtaking Japan, and will be behind only the US, China, and Germany. India's nominal GDP has more than doubled from 2014 to 2025 (projected). It's a growth of 105% in just a decade. In 2025, India will also become a $4 trillion economy. India was the 10th largest world economy in 2014 - come 2025 it will be the 4th largest - a six places jump in rankings in just 11 years. In a world of increasing global economic uncertainties, and amidst geopolitical conflicts and Donald Trump's tariffs, India will still retain the tag of being the fastest growing major world economy with a GDP growth rate of 6.2% for 2025. India achieved an average annual growth rate of 6.7% from 1990–2023 & in fact outpaced the US (3.8%), Germany (3.9%), and Japan (2.8%). What lies ahead? India will realise its dream of becoming a $5 trillion economy in 2027 and the world's third largest in 2028 by overtaking Germany. But to be on the path of stable and sustained economic growth, experts stress on the need for continuous reforms. PwC's Ranen Banerjee advocates for reforms that enable private enterprise to do business without the fear by decriminalising regulatory compliances with application of technology to support in compliances. 'Enabling exports through common facilities for quality outputs by MSMEs and continued investment in infrastructure to bring down logistics cost and enhance evacuation capabilities will be needed,' he adds. L&T's Shukla says, 'Going forward India will need to undertake deep agricultural reforms, labour reforms, education & skilling at a scale along with judicial administrative & police reforms,' he says. Radhika Rao of DBS Bank sees the need to focus on employment generation. 'Wheels of the structural engine will require to be oiled by keeping the development and reform agenda on track. Quality of growth is also likely to improve as macro balances remain in check alongside a changing trade composition. Lifting employment generation and by extension boosting incomes will be the vital objective for the administration in the rest of its term,' she says. There's no question that India ranks as one of the most crucial markets worldwide, including for major powers like the US and China. Over the past 11 years, political stability at the central government and ongoing reforms have strengthened global investor confidence. However, for the benefits of this growth to reach the broader population, it's essential to focus on creating ample employment opportunities for young people and building a robust manufacturing sector to ensure sustained, stable, and dependable economic progress. (With TOI inputs)
India.com
30-04-2025
- Business
- India.com
Why is RBI buying gold if India has world's 7th highest gold reserves? Know reason here
Why is RBI buying gold if India has world's 7th highest gold reserves? Know reason here Today is Akshaya Tritiya, a day that is thought to be very lucky for buying gold in Indian culture. But gold is not only important for families and individuals. It is also a smart and trusted investment for central banks around the world. This is why gold is called a 'safe haven asset', it keeps its value even when the world is going through tough times. In the last few years, the world has faced many big problems. From the Covid-19 pandemic to the Russia-Ukraine war, and trade fights that started during Donald Trump's time, many countries have seen economic trouble. Because of this, central banks, including India's Reserve Bank (RBI), have started buying more gold. As more countries buy gold, its price has reached all-time highs. The RBI has been actively increasing its gold collection. In the financial year 2024–2025, it bought 57.5 tonnes of gold. This was the second-largest amount of gold India has bought in one year since 2017. This step shows that India wants to make its economy stronger and prepare well for any future risk. India is now the world's fifth-largest economy and holds the seventh-largest gold reserves. Back in 2015, India was at the 10th position. So, this is a big jump. According to the World Gold Council, gold as a share of India's total foreign exchange reserves has gone up from 6.86 percent in 2021 to 11.35 percent by the end of 2024. This shows how gold has become more important in India's financial planning. Foreign exchange reserves are like the savings account of a country. They include foreign money, gold, and other important assets. These reserves help the country during tough times, like when prices rise too fast or when the rupee becomes weak. They also help keep the country's economy stable. Gold is a very important part of these reserves because its value stays strong, even when the value of money goes down. India's gold stock has increased from 653 tonnes in 2020 to 880 tonnes by March 2025. That's a 35 percent jump in just five years. Not only has the RBI been buying more gold, but it has also started bringing some of it back to India. Since September 2022, the RBI has shifted about 214 tonnes of gold from foreign banks to Indian storage. This step reflects the belief that in today's uncertain world, it is better to store gold at home. Sachchidanand Shukla, Chief Economist at Larsen & Toubro, says that by increasing its gold holdings and bringing a large part back to India, the RBI has made India's foreign exchange reserves stronger and more secure. It also protects India from global risks and from falling trust in assets linked to the US dollar.
