India Consumer Discretionary: Growth Slowing on NBFC Liquidity Tightness, Demand Softness

India Liquidity Update: Widening Crisis of Confidence, NBFCs and Developers Struggle for Liquidity

India Economist/Strategist

Ashutosh Datar

Macroeconomics

<p>The weak January industrial production data and benign inflation data for February reinforce the belief that the economy has hit a soft patch. With the government in election mode, public spending is likely to slowdown. Monetary policy is thus likely to turn accommodative to support growth given that inflation is likely to remain well inside the MPC's target of 4%. Indeed odds are increasing for continuation of monetary easing beyond April, especially if the forecast is for a normal monsoon.</p>

The weak January industrial production data and benign inflation data for February reinforce the belief that the economy has hit a soft patch. With the government in election mode, public spending is likely to slowdown. Monetary policy is thus likely to turn accommodative to support growth given that inflation is likely to remain well inside the MPC's target of 4%. Indeed odds are increasing for continuation of monetary easing beyond April, especially if the forecast is for a normal monsoon.

India: Weaker Growth, Benign Inflation Implies Continued Monetary Easing