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COUNTRY INSIGHTS

Parsing the general elections
INDIA · Report · 04 Jun 2024

The BJP was expected to solidly win the elections. They have emerged as the largest single party but with a modest showing. They are about 30 to 40 seats short of a majority coalition. These results give new life to opposition parties. The successful coalition, which is likely to be led by BJP, w...

A new phase in the exchange rate regime
INDIA · Report · 30 May 2024

The INR exchange rate regime shifted into reduced flexibility in 2014. It is now possible to look back at the period from October 2022, and we see a new phase, with a tightly managed exchange rate and an almost fixed USD/INR exchange rate. It is not fully clear how this was implemented. The reduc...

The outlook for 2024 is subdued
INDIA · Report · 27 Mar 2024

The economy slowed from the middle of 2022 onward. In this report, we examine three important drivers of demand: exports, investment and credit. Export growth in 2024 is likely to be weak, investment during 2024 is likely to be subdued, and credit growth in 2024 may slow somewhat. Hence, we expec...

An air pocket in the process of financial regulation
INDIA · Report · 20 Feb 2024

There was much hope for the "fintech revolution" in India, which could potentially break with the traditions of central planning and government-led control of products and processes. A series of factors have come together to diminish these possibilities. In recent weeks, developments in financial...

The promise of export-led growth
INDIA · Report · 16 Jan 2024

Many, if not most, global corporations have embarked on producing software, back office and R&D in India. There is considerable skill and capability in global corporations and domestically in performing these three roles in India. There was a remarkable streak of growth in these fields from 2...

The trajectory of listed vs. unlisted companies—the gap in performance has subsided
INDIA · Report · 11 Dec 2023

Over longer time horizons, there was a broad parity between the performance of listed and unlisted companies. However, in 2012, a gap opened up between the two, with superior performance by the unlisted firms. We review the period from 2012/13 to 2022/23, using large datasets of listed and unlist...

A puzzling picture in the economy
INDIA · Report · 24 Nov 2023

We see remarkable strength in the household data—employment and consumer sentiment—over the past year. Alongside this, private investment is showing strong gains, which is a measure of the optimism of private firms, and also augments the demand side. However, this is not yet a broad-based exp...

Inclusion in the J.P. Morgan GBI-EM Index
INDIA · Report · 01 Nov 2023

In 2024-25, for a period of 10 months, global index funds will bring $24 billion into a group of “Fully Accessible Route” (“FAR”)-designated Indian government bonds. This flow will be material when compared with the flow of government borrowing of that period. Beyond that, this policy change i...

Economics and the problems of India's foreign policy
INDIA · Report · 22 Sep 2023

Foreign policy has traditionally not been particularly important in thinking about India's economics. This has changed, however, as (a) the most important engine of Indian growth is now services exports; and (b) the world of the second globalization, of unrestrained access for poor countries into...

Is there a big leap in electronics exports?
INDIA · Report · 22 Aug 2023

Most global firms want to do less in China. This has created possibilities for the global supply chain to shift away from China. This has raised hope for India in a “China+1” sourcing strategy for many global corporations. In the aggregate, the gains in FDI or merchandise exports are small. In...

Difficulties after restoring pre-pandemic conditions
INDIA · Report · 10 Jul 2023

We are now able to assemble a picture of the post-pandemic recovery based on four business cycle indicators: listed company net sales, listed company operating profit, exports and bank credit. At first, there was a powerful post-pandemic recovery, but after February/March 2022, there has been a s...

Two recent difficulties in macroeconomic policy
INDIA · Report · 23 May 2023

The RBI has announced that Rs.2000 currency notes would be gradually withdrawn. The announcement features lead time and is not disruptive in the way that the famous "demonetization" announcement of 2016 was. But it provokes unhappy memories of demonetization. Alongside this, a story has been p...

Important gains in early 2023
INDIA · Report · 08 May 2023

The labor market has long been intractably stuck, with the number of persons working at about 400 million. In April 2023, this jumped by 22 million persons to about 430 million. This is first suggestion of an important change in the labor market in many years. Perception-based measures of how ...

The early evidence on benefits from China+1
INDIA · Report · 24 Apr 2023

Have the possibilities for India improved greatly, when many global firms view India as the “+1” in a China+1 sourcing strategy? We pull together the early evidence on 1) the share of India vs. China in US imports; 2) FDI into India; and 3) exports from India. There is low evidence in favor of a ...

The puzzles of the exchange rate and monetary policy
INDIA · Report · 10 Mar 2023

RBI has defended an exchange rate of about 82 or 83 rupees to the dollar in recent weeks. This interest rate defence involves raising the short rate. The third outcome that RBI is managing is the long rate: in its capacity as the debt manager for the government, it has held down the long rate...

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