Panorama – August 2023

Panorama August 2023 edition is out now!

Panorama is a meticulously crafted report that offers an overview of the macro factors and market trends influencing the Indian economic landscape.

Here are the key insights from the report:

  1. The corporate sector witnessed a broad-based improvement in capital expenditure in FY23. The presence of a robust industrial order book points towards sustained capex momentum in FY24.
  2. Over the past two years, there has been a sustained improvement in new investment announcements, mainly led by the private sector. While the services sector drives a significant portion of these announcements, the manufacturing sector also witnesses improvement.
  3. The Central Government frontloads capital expenditure in FY24. Additionally, the double-digit growth in steel consumption and cement production also indicates a robust capex momentum.
  4. The recovery of capacity utilization to the pre-COVID average bodes well for investments in capacity expansion.
  5. Household inflation expectations remain well-anchored in July 2023 despite a steep rise in food inflation. The RBI also commits to looking through the spike in food prices if there are no signs of persistence. Forecasters no longer expect a rate cut in FY24, as inflation forecasts have been revised upwards. The growth outlook has improved from the previous survey round.
  6. The withdrawal of Rs 2000 denomination notes and foreign exchange intervention by RBI led to a liquidity surplus. The RBI introduced the Incremental Cash Reserve Ratio (I-CRR) to drain surplus liquidity, resulting in a liquidity deficit as banks maintain a higher CRR. The higher currency demand during the festive season will likely further drain liquidity. As a result, the I-CRR is expected to be a temporary measure.
  7. Excess liquidity hampers transmission during a rate hike cycle. Thus, the I-CRR represents a policy tightening that enhances transmission by draining surplus liquidity.

Read the report here. 

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