Japan’s economy contracts after consumers, companies cut spending
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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The data reflected the negative impact of a New Year’s Day earthquake northwest of Tokyo and disruptions to auto production and sales after a certification scandal blew up at Daihatsu Motor Co., a subsidiary of Toyota Motor Corp.
Japan’s economy contracted in the first quarter as consumers and companies reduced spending, underscoring the fragile nature of the recovery.
Gross domestic product shrank at an annualized pace of 2% in the three months through March, the Cabinet Office said Thursday. Economists had forecast a contraction of 1.2%. Private consumption and capital spending both retreated, while net exports also exerted a drag on growth.
The data reflected the negative impact of a New Year’s Day earthquake northwest of Tokyo and disruptions to auto production and sales after a certification scandal blew up at Daihatsu Motor Co., a subsidiary of Toyota Motor Corp. Other factors dragging on growth included a steady decline in household spending, as workers contending with persistent declines in real wages tightened their budgets.
There were positive developments as well. The first quarter also saw companies emerge from annual negotiations with unions pledging the largest wage hikes in three decades. The prospect of higher pay eventually boosting consumption was a factor behind the Bank of Japan’s decision to raise interest rates for the first time in 17 years in March.
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India cuts windfall tax on crude petroleum to ₹5,700 tonne from May 16
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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According to an official notification, SAED on the export of diesel, petrol, and jet fuel or ATF, has been retained at nil.
The Indian government on Wednesday (May 15) cut the windfall tax on domestically produced crude oil to ₹5,700 per tonne from ₹8,400 with effect from May 16, 2024.
The tax is levied in the form of a Special Additional Excise Duty (SAED). According to an official notification, SAED on the export of diesel, petrol, and jet fuel or ATF, has been retained at nil.
India first imposed windfall tax on July 1, 2022, joining a growing number of nations that tax supernormal profits of energy companies. At that time, export duties of ₹6 per litre ($12 per barrel) each were levied on petrol and ATF and ₹13 a litre ($26 a barrel) on diesel. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.
A windfall tax is levied on domestic crude oil if the rates of the global benchmark rise above $75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above $20 per barrel. Product cracks or margins are the difference between crude oil (raw material) and finished petroleum products.
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After beating Azim Premji, Savitri Jindal now surpasses another tech mogul to become 4th richest person in India
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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With a fortune of $31.50 billion, Savitri Devi Jindal currently occupies the fourth rank after Mukesh Ambani, Gautam Adani and Shapoor Pallonji Mistry, according to Bloomberg data.
Five months after beating Azim Premji in net worth, Savitri Jindal — the richest woman in the country — has once again improved her rank among billionaires in India. This time by overtaking another software magnate — Shiv Nadar of HCL Technologies.
With a fortune of $31.50 billion, Savitri Devi Jindal currently occupies the fourth rank after Mukesh Ambani, Gautam Adani and Shapoor Pallonji Mistry, according to Bloomberg data. Shiv Nadar — the founder of HCL Technologies — had a net worth of $31.30 billion. Interestingly, the gap between the two billionaires was as high as $20.01 billion in January 2022.
Top Billionaires In The Country
Rank
Billionaire
Net Worth ($ bn)
1
Mukesh Ambani
108.75
2
Gautam Adani
99.11
3
Shapoor Pallonji Mistry
37.54
4
Savitri Devi Jindal
31.50
5
Shiv Nadar
31.30
6
Azim Premji
26.09
7
Dilip Shantilal Shanghvi
24.96
8
Radhakishan Damani
21.59
9
Cyrus S Poonawalla
21.09
10
Lakshmi Mittal
20.49
Source: Bloomberg
So far in 2024, the net worth of Savitri Jindal has swelled by $6.8 billion, and the same had increased by almost $11 billion during 2023, reveals data sourced from Bloomberg. Thanks to the persistent rally in stocks such as Jindal Steel & Power, JSW Energy and JSW Infrastructure. The three companies together contribute 56% to Savitri Jindal’s net worth.
While the stocks of Jindal Steel & Power and JSW Energy have surged about 50% over the last six months, the stock of JSW Infrastructure has gained 30% during the same period. Further JSW Steel, which contributes 23% to Jindal’s net worth, has returned 13% in the last six months.
On the flip side, Shiv Nadar saw his net worth fall by $2.6 billion since the beginning of the year, led by a lacklustre performance by HCL Technologies. Shares of HCL Technologies — the third largest software company by market capitalisation — have come off as much as 21% from their February highs. In fact, the fall in Shiv Nadar’s net worth so far has been the highest among top billionaires in the country.
According to the Bloomberg Billionaires Index, Mukesh Ambani continues to top the list with a net worth of $108.8 billion, whereas Gautam Adani comes close second with a net worth of $99.1 billion. Shapoor Pallonji Mistry — one of the largest shareholders in Tata Group companies — possesses a net worth of $37.54 billion as of May 14, 2024.
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US April inflation eased slightly in first sign of slowdown this year
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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According to the latest report from the US Labor Department released on Wednesday (May 15), prices inched up by 0.3% from March to April, a modest decrease from the previous month’s 0.4% increase.
Amid concerns over rising prices and economic stability, consumer inflation in the United States eased slightly last month, marking the first slowdown of 2024.
According to the latest report from the US Labor Department released on Wednesday (May 15), prices inched up by 0.3% from March to April, a modest decrease from the previous month’s 0.4% increase. Year-on-year, inflation saw a marginal decline from 3.5% to 3.4%.
“The Fed has been preaching patience even as inflation surged since the start of 2024, and so is unlikely to react to a single favourable print. Nevertheless, these numbers do indicate a tempering which is what the Fed is looking for,” Madhavi Arora, chief economist at Emkay Global said
On Tuesday (May 14), Fed Chair Jerome Powell reiterated that he expects inflation to ultimately reach the central bank’s 2% target. But in remarks during a panel discussion in Amsterdam, Powell acknowledged that his confidence in that forecast has weakened after three straight months of elevated price readings. Inflation has fallen sharply from 9.1% in the summer of 2022 but is higher now than in June 2023, when it first touched 3%.
The Fed’s policymakers have raised their key interest rate to a 23-year high of 5.3% in an effort to quell rising prices. Powell underscored Tuesday that the Fed will keep its rate at that level for as long as needed to fully conquer inflation, a signal that rate cuts won’t begin as soon as many people had hoped.
Such comments by Powell have dashed hopes on Wall Street that the Fed would cut its rate three times this year, which as recently as March the central bank’s officials had projected they would do. Many economists now envision just one or two reductions this year, starting in September at the earliest.
Economists are divided over whether the high inflation figures in recent months reflect a re-acceleration in price growth or are merely echoes of pandemic-related price distortions.
While auto insurance has soared 22% from a year ago, for example, that surge may reflect factors specific to the auto industry: New car prices jumped during the pandemic, and insurance companies are now seeking to offset the higher repair and replacement costs by raising premiums.
(With inputs from AP)
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India’s April merchandise trade deficit widens on lower exports
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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India’s April merchandise trade deficit stood at $19.1 billion, according to a Reuters calculation, higher than economists’ expectation of $17.23 billion, according to a Reuters poll. In March it was $15.6 billion.
India’s merchandise trade deficit in April was wider than expected, hurt by lower exports and a surge in gold imports, government data showed on Wednesday.
India’s April merchandise trade deficit stood at $19.1 billion, according to a Reuters calculation, higher than economists’ expectation of $17.23 billion, according to a Reuters poll. In March it was $15.6 billion.
India’s merchandise exports in April stood at $34.99 billion, while imports were $54.09 billion, government data showed. In March, merchandise exports were $41.68 billion, while imports stood at $57.28 billion.
In April gold imports more than doubled to $3.11 billion, compared with $1.53 billion in March. The country, which is the world’s third consumer of oil, imported $16.46 billion worth of oil in April compared with $17.23 billion, the government said.
“Gold imports are well within the average trend. It is not an exception,” Trade Secretary Sunil Barthwal said.
“Most of the central banks are buying gold because of conflicts. Gold prices have increased and in terms of value imports are appearing to be high.”
The share of gold in India’s foreign reserves rose to 8.15% at end-March from 7.37% at the end of September.
Services exports in April were $29.57 billion, while imports of $16.97 billion compared with $28.54 billion and $15.84 billion respectively in March.
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Coal’s share in India’s power generation capacity drops below 50% for the first time since 1960s
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Coal’s share, including lignite, in India’s total power generation capacity dropped below 50% for the first time since the 1960s. The report noted that the renewable energy trend is well ahead of India’s target of achieving 50% cumulative power generation capacity from non-fossil fuel-based sources by 2030.
The share of coal in India’s total power generation capacity dipped below 50% in the first quarter of 2024, the first time since the 1960s. The latest POWERup quarterly report from the Institute for Energy Economics and Financial Analysis (IEEFA) showed that renewable energy accounted for 71.5% of the record 13,669 megawatt (MW) power generation capacity added by India in the first quarter (January-March) of this year.
Coal’s share, including lignite, in India’s total power generation capacity dropped below 50% for the first time since the 1960s. The report noted that the renewable energy trend is well ahead of India’s target of achieving 50% cumulative power generation capacity from non-fossil fuel-based sources by 2030.
The decline in coal’s share of power generation capacity mirrors a global trend, with demand for coal in G7 countries hitting record lows in 2023, levels not seen since 1900. To accelerate the transition, G7 countries pledged last month to phase out all unabated coal power generation by 2035, building on their commitment to halt all construction of new coal-fired power plants.
The term “unabated” generally refers to the continued use of coal, oil, and gas without efforts to curtail emissions. At the United Nations’ COP28 climate change conference in December last year, world leaders reached a historic agreement to transition away from planet-warming fossil fuels and triple the global renewable energy capacity by 2030. According to the report, a record 69 gigawatts (GW) of renewable energy tenders were issued in India in the fiscal year (FY) 2023-24, surpassing the central government’s target of 50 GW per year.
“After a downturn from 2019 to 2022 due to supply-chain issues and global price spikes brought on by the COVID-19 pandemic and Russia’s invasion of Ukraine, the market has rebounded and gone from strength to strength, Vibhuti Garg, Director South Asia, IEEFA, said. India has risen to third place in the world’s solar power generation rankings, trailing only China and the US, according to Ember’s fifth annual Global Electricity Review of 80 countries.
Ranked ninth in 2015, India has now overtaken Japan, which, along with fellow G7 member Germany, has a persistently high demand for coal. Solar power generated a record 5.5% of global electricity in 2023, with India generating 5.8% of its electricity from solar last year.
Solar remained the world’s fastest-growing electricity source for the 19th consecutive year in 2023, adding more than twice as much new electricity worldwide as coal. India witnessed the world’s fourth-largest increase in solar generation in 2023 (+18 terawatt hour or TWh), behind China (+156 TWh), the United States (+33 TWh), and Brazil (+22 TWh). Together, the top four solar growth countries accounted for 75% of growth in 2023.
Solar’s contribution to electricity generation in India surged from 0.5% in 2015 to 5.8% in 2023. According to the International Energy Agency’s (IEA) “Net Zero Emissions” scenario, solar would make up 22%% of global electricity generation by 2030.
Given that electricity generation accounts for nearly half of India’s annual carbon dioxide emissions (1.18 gigatonnes in 2023), accelerating the transition to cleaner generation sources is crucial for the country to meet both its developmental and climate goals. The IEA says tripling global renewable energy capacity and doubling energy efficiency are essential to limit the average temperature rise to 1.5 degrees Celsius, a political target set in 2015 to prevent further worsening of climate impacts.
India is among the few countries aiming to triple renewable capacity by 2030.
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Pakistan to privatise all state-owned enterprises except strategic ones
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Pakistan’s Prime Minister Shehbaz Sharif announced the sweeping move on Tuesday, May 14, as his country starts negotiations with the IMF for a new long-term loan. Key among the enterprises slated for privatisation is the Pakistan International Airlines (PIA), a perennially loss-making entity.
In a bid to revive its struggling economy, Pakistan’s Prime Minister Shehbaz Sharif on Tuesday, May 14, announced plans to privatise all state-owned enterprises (SOEs), excluding strategic ones, in a sweeping move aimed at reducing the burden on the cash-strapped nation.
The announcement, made during a review meeting chaired by Sharif, signals a significant expansion of the government’s initial proposal to privatise only loss-making state firms, according to media reports. The decision comes as Pakistan starts negotiations with the International Monetary Fund (IMF) for a new long-term Extended Fund Facility (EFF).
Addressing the meeting, Sharif emphasised that the government’s role is to create a conducive environment for business and investment rather than directly engaging in business activities. He directed all ministries to collaborate with the Privatisation Commission to facilitate the process.
Key among the enterprises slated for privatisation is the Pakistan International Airlines (PIA), a perennially loss-making entity that has been a significant drain on the country’s finances. Sharif ordered that the privatisation of PIA be televised, ensuring transparency throughout the bidding and sale process.
PIA, which requires 11.5 billion Pakistani rupees per month solely for debt servicing alone, stands as one of Pakistan’s top public sector loss-making entities. The privatisation process of other institutions will also be broadcast live to maintain transparency and accountability.
A roadmap outlining the Privatisation Programme 2024-2029 was presented during the meeting, detailing the prioritisation of loss-making SOEs for privatisation, The Express Tribune newspaper reported. The government aims to expedite the sell-off process by appointing a pre-qualified panel of experts within the Privatisation Commission.
The move towards privatisation has been advocated by the Sharif-led government as a necessary step to alleviate the financial strain on the country, the Dawn newspaper repoted.
Pakistan’s Finance Minister Muhammad Aurangzeb emphasised the importance of privatisation in achieving economic stability during the Pre-Budget Conference 2024-25. “You have to move towards privatisation if you want economic stability in the country.”
The government’s decision to limit its involvement to strategic and essential SOEs aligns with recommendations from international institutions like the IMF, which has long urged Pakistan to pursue privatisation to address its fiscal challenges.
While Pakistan has made strides in stabilising its economy, challenges persist, including a high fiscal shortfall and stagnant growth. Despite efforts to control the external account deficit, growth remains subdued, with expectations of only marginal improvement compared to previous years.
Last summer, Pakistan teetered on the brink of default, narrowly avoiding a financial crisis. Since then, the economy has found stability following the conclusion of the previous IMF programme. Notably, inflation has seen a significant decline, dropping to approximately 17% in April from a staggering peak of 38% recorded last May.
With agency inputs
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Empowering growth for all by bridging the credit gap
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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India’s domestic credit to the private sector is 55% of its GDP, significantly lower than the global average of 148%. India lags behind economically robust Asian nations such as China, South Korea and Vietnam.
India is expected to become the world’s third-largest economy by FY2028, with a projected GDP of $5.2 trillion, surpassing Japan and Germany. This growth is primarily due to the remarkable expansion of the micro, small, and medium enterprises (MSME) sector, which currently consists of approximately 63.4 million MSMEs. However, despite this impressive economic narrative, India faces a significant challenge – constrained access to formal credit.
The credit gap in the MSME sector alone in India amounts to a staggering ₹25 trillion, with less than 10% of the Indian population having access to formal credit. This leaves over a billion individuals excluded from the financial mainstream and the overall debt demand from MSMEs in the country amounting to ₹69.3 trillion.
The World Bank data highlights that India’s domestic credit to the private sector is only 55% of its GDP, significantly lower than the global average of 148%. India also lags behind economically robust Asian nations such as China, South Korea and Vietnam.
As India strives towards economic pre-eminence, it is crucial to address this credit gap to ensure sustained and inclusive growth. Enhancing access to formal credit, particularly within the MSME sector, is imperative to ensure the country’s economic resilience and prosperity.
Gaps in traditional lending
The conventional process of accessing credit, primarily through banks or financial institutions, has long been characterised by the submission of paperwork and a subsequent waiting period for a decision. However, this process poses a formidable challenge, particularly for individuals with limited credit history or unconventional financial circumstances, as it heavily depends on credit scores and historical data. Consequently, it potentially leads to the exclusion of certain applicants, which is accentuated for customers who are new to credit and lack a substantial credit history.
Traditional lending institutions’ sluggish adoption of digital reforms and essential technology is compounding this challenge. The hesitancy to embrace technological advancements increases operational costs and diminishes competitiveness for financial institutions. As a result, these institutions struggle to keep pace with the dynamic needs of customers and experience overall inefficiencies in the lending process.
Technology reshaping lending
The modern landscape of digital financial enablers is fundamentally reshaping credit accessibility, especially for segments historically underserved. These entities leverage digital onboarding, assimilating vast amounts of critical data for making credit decisions via API’s and technology-driven underwriting processes, ensuring precise risk assessments, swift loan approvals, efficient disbursements, and streamlined collections.
A prime example is Lentra, which strategically addresses industry challenges, enhancing credit accessibility through its comprehensive Intelligent Cloud lending platform. Lentra’s approach is distinguished by utilising cutting-edge technologies like open APIs and artificial intelligence (AI), enabling automated loan approvals. This expands the banks’ reach and enriches customer engagement while reducing operational costs. Serving over 50 banks and financial institutions in India and Southeast Asia, Lentra processes a substantial volume, having disbursed over $27 billion worth of loans and processing more than 2 million loan applications every month on Intelligent Lending cloud platform.
Crucially, the offerings of firms like Lentra extend beyond conventional creditworthiness assessments. They leverage advanced technologies to monitor loan repayments, eliminating biases in customer interactions and in the process democratising the credit ecosystem.
Lentra Digital Lending Summit 2023
To further showcase such digital tools and foster discussions on expanding credit access, Lentra is organising the Lentra Digital Lending Summit 2023 in association with CNBC-TV18 on December 13. This day-long event will bring together leaders from various financial institutions, fostering discussions on the impact of emerging technologies on lending processes and scalability. The summit represents a unique opportunity to mobilise India’s lending strength and instigate a concerted effort to transform how credit is sought and delivered. With captivating discussions, insightful interactions, and a felicitation ceremony on the agenda, the Lentra Digital Lending Summit 2023 is designed to become a vital cog in India’s economic machinery.
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Joe Biden imposes tariffs on Chinese chips, critical minerals and EVs
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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The tariff rate on semiconductors will double from 25% to 50% by 2025, targeting an industry Biden has made a centerpiece of his manufacturing agenda through billions in subsidies to bolster US production.
President Joe Biden is hiking tariffs on a wide range of Chinese imports — including semiconductors, batteries, solar cells, and critical minerals — in an election-year bid to bolster domestic manufacturing in critical industries.
The US will also raise levies on port cranes and medical products, in addition to previously reported increases on steel, aluminum, and electric vehicles. The changes are projected to affect around $18 billion in current annual imports, the White House said.
The moves represent Biden’s most comprehensive update to the China tariffs first imposed by his predecessor, former President Donald Trump, and a recognition that a hawkish approach to trade with Beijing remains popular with US voters. None of Trump’s tariffs will be reduced. Biden will ratchet up rates on goods the US struggled to import during the coronavirus pandemic, and for key industries — like chips and green energy — that he’s sought to bolster since he took office.
Still, Biden must strike a careful balance. Additional tariffs risk increasing prices for consumers already hurting from inflation, and inspiring the ire of China, which could choose to retaliate in kind.
The changes are staggered to take effect from 2024 to 2026, and are more targeted than the 60% flat tariff Trump has proposed. The biggest jump is for EVs, with the tariff rate quadrupling, while other imports are seeing levies doubled or being imposed for the first time.
Biden will formally announce the measures, detailed in a statement, at a White House Rose Garden event on Tuesday. Officials, who described the plan on condition of anonymity before the official announcement, said they are pairing domestic investments from the bipartisan infrastructure act and the Chips and Science Act with new tariffs to level the playing field with China.
In some cases, the levies apply to areas where China has only a small segment of the US market, but are intended to head off a potential deluge of imports.
“China is simply too big to play by its own rules,” National Economic Council Director Lael Brainard told reporters. “China’s using the same playbook it has before to power its own growth at the expense of others by continuing to invest, despite excess Chinese capacity, and flooding global markets with exports that are underpriced due to unfair economic practices.”
Targeted Industries
The tariff rate on semiconductors will double from 25% to 50% by 2025, targeting an industry Biden has made a centerpiece of his manufacturing agenda through billions in subsidies to bolster US production.
The levies aim to counter China’s rush into so-called legacy chips, which are older-generation components that are still essential to the global economy. The Biden administration recently concluded a survey of more than 100 auto, aerospace, defense and other companies about their supply chains for those less-advanced semiconductors, and the EU is considering launching a similar review of its own.
Certain critical minerals will see a new 25% tariff this year, while natural graphite and permanent magnets will be hit with that rate in 2026. Ship-to-shore cranes will also face a new 25% tariff this year.
The electric vehicle tariff will take effect this year, with a final tariff rate of 102.5%, up from 27.5% now. And tariffs on certain steel and aluminum from China — currently facing a 0% or 7.5% tariff — will rise to 25% this year.
Tariffs on lithium-ion batteries for electric vehicles, as well as battery parts, will jump to 25% from 7.5% this year, while non-EV lithium-ion batteries make the same jump in 2026. Solar-cell tariffs will rise from 25% to 50% this year.
The US will also impose a new 50% tariff on Chinese syringes and needles this year, while tariffs on personal protective equipment, such as respirators and face masks, rise to 25% from either 0% or 7.5% now. Tariffs on rubber medical and surgical gloves will jump to 25% from 7.5% in 2026.
It’s unclear whether the moves will trigger retaliatory tariffs by China, but the tariff regime proposed under Trump already applies to about $226 billion worth of goods, according to an estimate provided by the administration, based on 2023 data.
“Hopefully we will not see a significant Chinese response — but that’s always a possibility,” Treasury Secretary Janet Yellen said in an interview with Bloomberg Television on Monday.
She said in a statement that “President Biden and I have seen firsthand the impacts of surges of certain artificially cheap Chinese imports on American communities in the past, and we will not tolerate that again.”
“These problems built up over time and will not be solved in a day,” Yellen added.
Long Review
Tuesday’s announcement is the culmination of a mandatory review of Trump’s tariffs that stretched for more than a year and under the shadow cast by the upcoming election. Both candidates have sought to portray themselves as tough on Beijing with Trump pledging across-the-board tariffs on China if elected.
Biden has touted a domestic manufacturing boom he says is keeping US jobs at home and his allies have criticized Trump’s tariff proposal, saying it would only worsen already high inflation that has been a persistent liability.
Biden’s tariff changes do not include any offsetting reductions. One of the officials said the US had not seen improvements in many unfair Chinese trade practices, such as forced technology transfers, since the tariffs were first imposed, making any reductions unwarranted.
Brainard referred to the domestic calculations at play.
“China’s unfair practices have harmed communities in Michigan, in Pennsylvania and around the country that are now having the opportunity to come back,” she told reporters, referencing two swing states crucial to the 2024 outcome.
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CPI data — why retail inflation could broadly ease this fiscal to 4.5%
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Food inflation, which has a 39.1% weight in the CPI gauge, has remained well above 8% for six months now. Pressure on food prices continues, including due to the ongoing heatwaves. But fuel and light, with a 6.8% weight, has been reducing the pressure on the headline for eight months, points out CRISIL’s Chief Economist Dharmakirti Joshi.
Food inflation edged up in April to 8.7% from 8.5% in March, driven by costlier cereals and meat, while vegetables, which have been sticky at elevated levels, softened a touch. Despite the uptick in food, non-food components helped curtail Consumer Price Index or CPI-based inflation gauge to 4.83% in April, two basis points lower than in March.
Fuel inflation fell to 4.2%, compared with 3.4% in March, whereas core inflation softened further to 3.2% from 3.3%. This is the lowest ever recorded for core.
While the mild easing of the headline number in April is encouraging, acceleration of this downtrend is what matters, especially since recent swings have been worrying.
Food inflation, which has a 39.1% weight in the CPI gauge, has remained well above 8% for six months now. Pressure on food prices continues, including due to the ongoing heatwaves.
Our base case is that the upcoming monsoon rains can offer respite, assuming they are well distributed in terms of time and geography.
Fuel and light, with a 6.8% weight in the CPI gauge, has been reducing the pressure on the headline for eight months led by retail fuel price relaxations by the government. But if crude oil prices rise substantially and stay elevated in the wake of geopolitical stress, the gains to inflation could be reversed.
Meanwhile, core inflation with a weight of 47.3% has been low for most of this period but the expected rise in commodity prices together with a low base effect will put upward pressure on core inflation in the current fiscal. Net-net for fiscal 2025, we expect CPI inflation to broadly ease this fiscal to 4.5% from 5.4% last fiscal.
—The author, Dharmakirti Joshi, is Chief Economist at leading analytics and rating firm CRISIL. The views expressed are personal.
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