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THIS WEEK'S HIGHLIGHTS

Amid growth downgrades (by OECD, ADB), and weak private investments (as assessed by the RBI), positive developments on the fiscal front provided some respite this week- i) the Centre lifted restrictions on various ministries spending with immediate effect, ii) FYTD22 net direct tax collection until 22Sep’21 expanded 74.4%YoY, with securities transaction tax almost touching the budget target in Sep’21 itself, iii Principal Economic Advisor- Sanjeev Sanyal expressed confidence about some announcement on inclusion of Indian sovereign debt in global indices by end of FY22, and iv) Expenditure secretary expects capex to gather pace in 2HFY22. He is also observing significant progress in LIC’s stake sale.

Other highlights of the week included- i) RBI’s announcement to conduct an operation twist worth INR 150bn on 30Sep, ii) likely extension of the INR 4.5trn Credit Line Guarantee Scheme by 6 months, and iii) Centre’s foodgrain production target of 307.3mn tonnes (mt) for the current crop year; down 0.4% YoY. On the COVID-19 front, i) India is expected to resume vaccine exports from Oct’21, and ii) the UK govt. disapproved India’s COVID-19 vaccine certification due to which Indian travellers will have to quarantine on arrival.

Globally- i) the FED signalled to soon commence tapering with median forecasts hinting at rate hikes in 2022, ii) China’s 2nd largest real estate company, Evergrande is struggling to avoid default, iii) the IMF has called for vaccinating 40% worldwide population by 2021-end, and iv) PM Modi left for his 5-day visit to the US. Meanwhile, i) forex reserves moderated further to USD 639.6bn on 17Sep’21 vs. the record highs of USD 642.5bn on 3Sep’21, ii) the INR weakened marginally to 73.68/USD vs. 73.4 last week, and iii) Brent Crude rose to USD 77.6bbl. In the coming week we look forward to the GoI’s borrowing calendar for the 2HFY22, along with data releases on Centre’s fiscal, core industry, GST and PMI.

MACROECONOMIC INDICATORS

* India's GDP growth forecast was revised downwards for 2021-22 this week by-i) OECD by 20bps to 9.7%, and ii) by 1ppt to 10% by the Asian Development Bank. For 2022-23, projection stand at 7.9%, 7.5% respectively by each organization.

* Net direct tax collection grew 74.4%YoY to INR 5.7trn during 1 Apr-22 Sep21 vs, INR 33.3trn in FYTD21.

* Rainfall recorded was 2% lower than LPA in week ended 24Sep’21 as per IMD.

* India’s total coronavirus cases rose to 33.6mn on 24Sep’21 vs. 3.34mn on 17Sep’21. About 841.5mn Covid-19 vaccine doses have been administered in India as on 24Sep’21 (45% of population with at least 1 st dose).

* Brent Crude rose to USD 77.6/bbl vs. USD 74.9/bbl last week.

* The INR closed at INR 73.68/USD vs. 73.48/USD last week.

* Forex reserves stood at USD 639.6bn on 17Sep’21, vs. i) USD 641.1bn on 10Sep; and ii) record highs of USD 642.5bn on 3Sep’21.

* Net market borrowings of the Centre and States stood at INR 5,061bn and INR 2,142.0bn respectively as on 17Sep’21 (vs. INR 5,754bn and INR 2,624bn respectively, last year).

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