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India GDP Growth Slows, RBI Data Localisation, Fed Signals a Rate Hike

Professor of Financial Economics and Part-time Value Investor, Transfin.
Nov 30, 2018 1:12 PM 3 min read
Editorial

Let's do some "political mathematics"... 

 

2015: The method for calculating India’s GDP was updated for figures from 2012/13 onwards i.e. representing a bit of UPA's tenure, but a largely NDA-led period. NDA's new numbers looked good. UPA's numbers from 2006-2012 were not updated i.e. stayed the same.

 

UPA = Sad; NDA = Happy

 

Zoom to August 2018: The Mundle committee applied the 2015 methodology now to UPA's numbers (for 2004-2012). UPA's numbers now looked even better vs. NDA. The government although declared them as "experimental." 

 

UPA = Happy; NDA = Sad

 

November 2018: The "final" back-series GDP figures for 2006-2012 is out.  

 

UPA = ?; NDA = ?; You = ? 

 

Hit reply to share your answer. While you figure this puzzle out, also check Today's Top 6 Business Stories through our End Of Day Wrap Up:

 

GDP growth slows to 7.1% in Q2 vs. 8.2% in Q1, below RBI estimates of 7.4%. 

 

The What: India's GDP grew 7.1% in Jul-Sep quarter, down from 8.2% in Q1 on back of high fuel prices, sliding rupee and relatively weaker rural demand. The GDP growth rate came at 6.3% in the same period last year.

 

Up Close: The slump is also on account of poor performance in mining and agriculture sector. The agriculture sector grew at 3.8% in Q2 as against 5.3% in Q1. The manufacturing sector grew 7.4%, slowing down considerably from 13.5% in Q1

 

Supreme Court approves sale of RCom’s 4G spectrum to Reliance Jio.

 

What You Need to Know: SC has asked RCom to provide a corporate guarantee of INR14bn within two days to get a NOC from the government. This will be in addition to the land parcel, which has to be put up as security.

 

The Big Picture: In its earlier petition before the court, the Department of Telecommunications had remained firm on its stand that it would require a bank gurantee of nearly INR29bn from RCom or RJio before allowing the spectrum sale.

 

NPCI seeks clarification from WhatsApp and Google on their plans to store data pertaining to Indian users on their UPI-based payment apps exclusively within India.

 

Perspective: On April 5, 2018, RBI had instructed that all payment system operators will have to ensure that data related to payments is stored only in India within 6 months.

 

What’s the Catch: Now while companies say they prefer a data mirroring approach, the National Payments Corporation of India (NPCI) is pushing for storage of data “exclusively” in the country.

 

Fairfax to sell further stake in ICICI Lombard General Insurance.

 
The What: As per a Livemint article, Fairfax, a Canada-based financial holding company is planning to soon launch a block trade to further sell its stake in general insurance company ICICI Lombard General Insurance.
 

Zoom Out: Fairfax currently holds currently holds 9.91% worth INR3,600cr stake in the general insurer. It had earlier sold a 12.18% stake in ICICI Lombard before the latter went public in 2017.

 

US/INTERNATIONAL

 

AT&T to offer 3-tier services on its streaming platform set to launch next year.

 

The What: After acquisition of Time Warner, now renamed WarnerMedia, AT&T plans launch of a multi-tiered entry on its streaming service. An entry-level streaming service will focus on movies. The second tier would consist of original programming and more films. The third would be a bundle tier with content from the first two plus classic films, comedy and children’s programming.

 

The Why: The move will help the company compete against the likes of Netflix and Walt Disney, who have planned a similar online system.

 

Fed signals a likely rate increase in December, to adopt a more flexible approach thereafter.

 

The What: Minutes from the meeting of the Federal Open Market Committee suggested that another increase in the target range is likely, if incoming information on the labour market and inflation was in line with or stronger than their current expectation.

 

Up Close: Participants expressed concern over the rising level of debt in the non-financial business sector, and especially the high level of leveraged loans which could impact credit availability. An increase in tariffs could also possibility slow down economic growth.

 

Zoom Out: The Central Bank has raised rates by a quarter-percentage point every three months over the past year.

 

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