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☕ A tightrope walk for RBI this year?

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☕ A tightrope walk for RBI this year? 1
Monday 25 April 2022

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Things may be tricky for the Indian economy, going ahead. Households and businesses are bracing for higher borrowing costs, with the Reserve Bank of India (RBI) expected to start raising interest rates in June. The impending rate hikes combined with sharper input costs are expected to force companies to go slow on expansion plans to conserve cash. Companies, especially those with weaker balance sheets, are likely to redraw spending plans. That’s bad news for India’s mammoth labour market—new investments create jobs.

☕ A tightrope walk for RBI this year? 3

Meanwhile, it’s going to be a tightrope walk for the RBI this year. Scroll down. Also, don’t miss our pieces on UK FTA talks, HCL Tech’s valuation gap, and stranded shipping containers.

The spike in covid-19 infections in the national capital is discomforting. Do keep an eye on the daily infection count. Here’s our listing of other key data releases expected this week.

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The main stuff

Ships bound for Russia make their way back

Thousands of shipping containers that left India for Russia are stranded across ports in Europe and West Asia as the war in Ukraine gums up transport logistics worldwide. While some shipping liners insist on additional fees to return the undelivered containers to India, some exporters are scrambling to find overland routes to get them to their destination or find new buyers for these goods in other countries. Rituraj Baruah and Subhash Narayan report. Read more.

India-UK FTA talks: Liquor tariffs on the table

The third round of India-UK free trade agreement talks starts today with a focus on resolving key issues, notably the demands that India cut its tariff on alcoholic beverages and processed food, and the UK allow more Indian professionals to live and work in that country. The two sides aim to close the deal by October. India and the UK have covered significant ground in the last two rounds, with the UK agreeing to eliminate duty on Indian rice and textile goods, while India is set to allow the duty-free entry of British apples, medical devices, and machinery, report Dilasha Seth and Ravi Dutta Mishra. Read more.

It will be a tightrope walk for RBI this year

As long as the war in Ukraine continues, commodity prices will remain high, pushing up the import bill. Also, with rich-world central banks raising interest rates to control high inflation, foreign money invested in stocks and bonds will continue leaving India. This will keep the dollar demand firm. RBI may have to let the rupee depreciate gradually instead of defending it at all costs. Of course, as the rupee is allowed to depreciate, some imported inflation is likely to creep in. This will force the RBI to raise interest rates. It would be a tightrope walk for the RBI this year, writes Vivek Kaul. Read more.

HCL Tech’s valuation gap with peers to stay

HCL Technologies Ltd’s products and platforms (P&P) vertical was a pain point in the quarter ending March with the segment’s revenues falling 24% sequentially. The HCL management said it expects the P&P business to remain volatile in the near-term, as it is making efforts to push more product licences into becoming subscription-based. This may not bode well for the stock. Analysts expect the valuation gap between HCL and its peers to continue, reports Harsha Jethmalani. Read more.

Bots as a Service is making India Inc agile (Premium)

The covid-19 pandemic has underlined the need for ‘intelligent automation’. It is now permeating into industries that were not inherently digital and is helping them become more predictive and prescriptive. Intelligent Automation integrates new-generation technologies such as robotic process automation, artificial intelligence, and business process management to automate processes in a manner that is smart and cost-effective. Bots as a Service is a big part of this shift, writes Ayushman Baruah. Read more.

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Elsewhere…

Global business news

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Federal Reserve Chairman Jerome Powell is shifting monetary tightening into a higher gear. His goal sounds straightforward—lift interest rates to “neutral,” a setting that neither spurs nor slows growth. But there’s a catch: Even in normal times, no one knows where this theoretical level is. And these aren’t normal times.

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The Japanese yen has tumbled to a 20-year low against the US dollar. That might be bad news for markets far beyond Tokyo. Traders around the world watch the yen’s rise and fall not just to follow Japanese markets but also to gauge how investors globally are feeling.

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Saudi princes have sold more than $600 million worth of real estate, yachts and artwork in the US and Europe since the kingdom’s de facto ruler tightened the purse strings of the ultrawealthy ruling family. The transactions represent a radical change of fortune for senior princes who funneled windfalls from oil booms in the 1970s and 1980s into some of the world’s most exclusive markets.

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The war in Ukraine is reviving concerns in Taiwan and some Asia-Pacific nations about the fragility of their internet connections because they rely on undersea cables that could be severed in a Chinese attack. Ukrainians have used the internet to rally resistance to Russia’s invasion, counter Moscow’s propaganda and win international support.

e-paper
News in numbers
₹12,300 crore

The total domestic equities sold by foreign portfolio investors (FPIs) so far in April 2022 amid concerns over US Fed’s interest rate hike and geopolitical tensions.

1,441

The number of electric two-wheelers that Ola Electric will recall following reports of vehicles catching fire in recent weeks.

24 crore
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The number of doses of Covishield that has been supplied/offered free of cost to the Government of India.

653 million tonnes

The quantity of coal transported by Indian Railways in FY22—an all-time high—and up 20.4% from the previous year.

1,550 litres

The daily fuel usage that a new underpass in Delhi’s Ashram area will cut, reducing 3,600 kg of carbon gas release, according to deputy chief minister Manish Sisodia.

howindialives.com
Chart of the day
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Covid-19 cases are again rising in the national capital. While most Indians are doubly vaccinated by now, the number of those who are not still runs into millions. Maharashtra leads this tally with nearly 23 million estimated adults who have not got their two doses, followed by Bihar and Uttar Pradesh with over 19 million each.

LOUNGE RECOMMENDS

Outlast

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In their book, Outlast: How ESG Can Benefit Your Business, Mukund Rajan and Col. Rajeev Kumar explain that the world is now divided into companies that take the ESG mission seriously and those that pretend to care about ESG. This is not a manual on how to implement ESG and impress global fund managers and regulators. It is an impassioned argument, an articulate appeal, for a business grammar of a higher order, one that benefits shareholders and stakeholders alike. Go deeper.

WHAT THE FACT

Dr. Seuss

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Geisel at work, in 1957. (Al Ravenna, World Telegram staff photographer, Public domain, via Wikimedia Commons)

Popular children’s book writer and illustrator Dr. Seuss’ real name was Theodor Geisel. His first book, And to Think That I Saw It on Mulberry Street, was rejected by at least 27 publishers. According to one of his versions, he was ready to destroy the manuscript but randomly bumped into an old friend who had just become a book editor. The book was finally published in 1937.

Contributed by katanaThebizdom

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