INSUBCONTINENT EXCLUSIVE:
Mumbai: The Reserve Bank has lowered its inflation target for first quarter of 2019-20 to 4.8 per cent from 5% in its August statement
But the central bank has also warned about the upward risk to inflation on account of higher food and crude prices
Moreover, depressed financial market condition could also hurt investments.
Uneven rainfall across the country has added to the risks to
An estimate of the impact of an increase in minimum support prices (MSPs) announced in July has been factored in by the central bank in its
inflation projections.
Besides, the price of the Indian basket of crude oil has increased sharply, by $ 13 a barrel, since the last monetary
policy committee (MPC) resolution
Also, international financial markets remained volatile with emerging market economies (EME) currencies depreciating significantly
consideration, inflation is projected at 4.0 per cent in Q2:2018-19, 3.9-4.5 per cent in H2 and 4.8 per cent in Q1:2019-20, with risks
Rising crude oil prices and other input costs may also drag down investment activity by denting profit margins of corporates.
This adverse
impact will be alleviated to the extent corporates are able to pass on increases in their input costs
Uncertainty surrounds the outlook for exports
Tailwinds from the recent depreciation of the rupee could be muted by the slowing down of global trade and the escalating tariff war.
