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THIS WEEK'S HIGHLIGHTS

* Government’s latest borrowing calendar revealed that H1FY24 constitutes 57.5% (INR 8.9tn) of the total budgeted borrowing of INR 15.4tn. More than 70% of the issuances consist of tenures above 10years. This would help ease of pressure from the shorter end while the longer end yields (10yr) are expected to rise in the range of 7.4% - 7.6% from 7.3% currently.

* India’s Current Account Deficit (CAD) improved to 2.2% of the GDP in Q3FY23 vs 3.7% in Q2. Narrowing merchandise trade deficit coupled with robust services and private transfer receipts led to the improvement. We expect the CAD for FY23 at 2.1% of GDP.

* Wage rates under MGNREGA have been notified for FY24. Highest wage rate is set for Haryana (INR 357/day) while MP and Chhattisgarh has the lowest rate (INR 221/day). Highest growth is recorded in the wages for Rajasthan at 10.4% YoY.

* Food Corporation of India (FCI) recently procured ~10,727 tonnes of wheat from MP in the ongoing rabi season at the MSP of INR 2,125/quintal. FCI will commence procurement in Punjab, Haryana, Rajasthan and UP from 1st April. Ministry of Agri expects that the impact of the unseasonal rains will have a marginal impact. We had highlighted that the impact on CPI inflation would be marginal.

* US GDP grew 2.6% in Q4CY22 marginally lower than the 3rd estimates of 2.7%. Growth is on the back of uptick in consumer and government spending and decrease in imports. China PMI picked up pace.

* The new trade policy sets ambitious target of USD 2tn of exports by 2030 (vs USD 750bn now). While e-com exports are pegged at 300bn.

* Markets would be keenly awaiting MPCs policy decision on 6th Apr, there’s an expectation of 25bps hike. We expect the MPC to hike policy rates by 25bps as inflation (headline and core) still hovers above the 6% handle. But we believe that RBI needs to look for options (policy tools) other than rate hikes.

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