The momentum in growth Q-o-Q-SAAR eased during Q3 and Q4 from Q2 (Chart III.18). Find stories, updates and expert opinion. The PLI, covering 13 sectors with a commitment of the government support amounting to nearly 1.97 lakh crore, has begun attracting investment, including FDI, in the manufacturing sector. GFCE support to aggregate demand revived in Q4 (the implicit growth in the SAE of NSO is 29.2 per cent). The baseline assumes a normal south-west monsoon in 2021 and any deviations in the actual outturn on either side would be a critical factor in determining the food as well as headline inflation (Charts I.11b and I.12b). With resumption of capital outflows since the latter part of February, EME stock indices have shed gains. Amidst stretched valuations, equity prices have become sensitive to the hardening of yields. Special liquidity facility for mutual funds, Refinance to NABARD, SIDBI, NHB and EXIM Bank. Overall, the total liquidity support announced by the Reserve Bank since February 6, 2020 (up to March 31, 2021) amounted to 13.6 lakh crore [6.7 (6.9) per cent of 2019-20 (2020-21) nominal GDP] (Table IV.7). The Chinese economy seems to have lost some steam in Q1 from COVID-19 flare-ups in January and the associated containment measures. Credit to the industrial sector, however, contracted marginally by 0.2 per cent, mainly due to a decline in credit to large industries (which account for more than 80 per cent of credit to the industrial sector). The centres net tax revenue increased by 9.1 per cent during April-February 2020-21 and stood at 90.4 per cent of revised estimates (RE) for the full year (Chart III.9). After the unprecedented contraction in Q1, real gross domestic product (GDP) recorded sequential upturn in Q2 and regained positive territory in Q3 with the ambit of the recovery broadening to encompass a wider spectrum of sectors, supported by a significant decline in COVID-19 infections. In January 2021, the 10-year yield rose above 1 per cent for the first time since March 2020 on expectations of further stimulus by the new US administration, better economic recovery prospects and rising inflation expectations. In January 2021, the IIP contracted by 1.6 per cent, pulled down by the downturn in manufacturing. Autoregressive Conditional Heteroskedasticity, Brazil, Russia, India, China and South Africa, Commission for Agricultural Costs and Prices, Controller General of Accounts, Ministry of Finance, Consumer Price Index for Agricultural Labourers, Consumer Price Index for Industrial Workers, Directorate General of Commercial Intelligence and Statistics, Federation of Indian Chambers of Commerce and Industry, Fixed Income Money Market and Derivatives Association of India, Financial Market Trade Reporting and Confirmation System, First Half of the Financial Year (April-September), Second Half of the Financial Year (October-March), International Reserves and Foreign Currency Liquidity, Marginal Cost of Funds Based Lending Rate, Mahatma Gandhi National Rural Employment Guarantee Act, Ministry of Agriculture and Farmers Welfare, Ministry of Statistics and Programme Implementation, National Bank for Agriculture and Rural Development, National Council of Applied Economic Research, Network of Central Banks and Supervisors for Greening the Financial System, National Oceanic and Atmospheric Administration, Organisation for Economic Cooperation and Development, Organization of the Petroleum Exporting Countries, Public Administration, Defence and Other services, Society of Indian Automobile Manufacturers, Small Industries Development Bank of India, Weighted Average Domestic Term Deposit Rate, Working - Class Family Income & Expenditure Survey. The upturn has been primarily driven by strong restocking by China and positive sentiments propelled by stimulus measures across major economies. Between March 26, 2020 and March 31, 2021, the spread of AAA-rated 3-year bonds (over 3-year G-sec) issued by corporates fell from 276 bps to 22 bps. Global Marketing Svend Hollensen. How many of the 200 households surveyed used both brands of soap? Business sentiment improved in H2:2020-21, with the Reserve Banks business assessment index rising to 113.1 in Q4:20-21 (the 93rd round of the industrial outlook survey) from 108.6 in Q3:2020-21. At the disaggregated level, drugs and pharmaceuticals, iron ore and agricultural products pushed up non-oil export growth. With inoculations underway, high frequency indicators, however, point to some pick-up in Q1:2021. The median term deposit rate (maturity up to 1 year) of foreign banks declined from 4.89 per cent in March 2020 to 2.79 per cent in February 2021. Other personal loans i.e. The Reserve Bank of India completed the central governments market borrowing programme for 2020-21 successfully and in a non-disruptive manner (Table III.6). Yields spiked following the announcement of Government borrowings of 12.05 lakh crore for 2021-22 and additional borrowing of 80,000 crore for 2020-21. Prices of oils and fats (weight of 3.6 per cent in the CPI and 7.8 per cent in the food and beverages group) remained one of the major pressure points throughout the year. Chapter IV: Financial Markets and Liquidity Conditions, IV.3: Liquidity Conditions and the Operating Procedure of Monetary Policy, https://www.bankofengland.co.uk/-/media/boe/files/letter/2021/march/2021-mpc-remit-letter.pdf?la=en&hash=C3A91905E1A58A3A98071B2DD41E65FAFD1CF03E, 9 per cent above long period average for 2020, Given the Covid-19 impact on activity, revenues, and expenditures and factoring in the additional borrowings announced, fiscal deficits are expected to be significantly higher, Domestic macroeconomic/ structural policies during the forecast period. 2 A change in CPI year-on-year (y-o-y) inflation between any two months is the difference between the current month-on-month (m-o-m) change in the price index (momentum) and the m-o-m change in the price index 12 months earlier (base effect). Subsequently, as vegetable prices corrected, perishables contribution decreased sharply to 32.0 per cent during December 2020-January 2021. In February, the large sell-offs saw longer term yields, especially of the 10-year and 30-year bonds shoot up, leading to steepening of the yield curve. _________________________________________________________. GVA in agriculture and allied activities expanded by 3.0 per cent in H2:2020-21, maintaining its pace of H1. Outgoes on food subsidy in RE were over three and half times of the BE (2.2 per cent of GDP) because of distribution of free foodgrains to over 80 crore people and on-budgeting of past subsidy payments to the Food Corporation of India (FCI) in the form of National Small Saving Fund (NSSF) loans. At the same time, the interest coverage ratio of listed non-financial private companies increased in Q3, indicating improved debt servicing capacity of these companies (Chart III.7). Conventional models followed by the central banks cannot predict climate-related risks accurately, including exposure to green swan3 risks, which are in nature of climate black swan events, i.e., extreme financially disruptive events that could be the next systemic financial crisis (Bolton et al. Manufacturing firms polled in the January-March 2021 round of the Reserve Banks industrial outlook survey3 expected further input cost pressures from raw materials in Q1:2021-22; moreover, positive sentiments on profit margins rose on the back of higher selling prices, suggesting a return of pricing power (Chart I.4). All coefficients are statistically significant at 1 per cent level. Similarly, tax implications were visible in prices for pan, tobacco and intoxicants while CPI for these items remained in double digits (average 10.7 per cent), inflation in WPI beverages, and tobacco products averaged 0.2 and 2.5 per cent, respectively, during September 2020 to February 2021 (Chart II.19b). A few major EMEs, however, raised rates in March in response to inflation concerns. Banks returned TLTRO funds amounting to 0.37 lakh crore 33.1 per cent of the total amount of 1.13 lakh crore availed under the scheme. Adjusted non-food credit growth (i.e., non-food credit including non-SLR investments) increased to 6.0 per cent as on March 12, 2021 from 5.5 per cent a year ago (Chart IV.21b). Special OMOs (OTs), LTRO and TLTRO auctions also had a significant impact on G-sec yields, thereby moderating the term spread (Talwar et. In 2021, it has strengthened mainly due to rising bond yields and expectations of higher inflation and higher interest rates. In terms of the 40-currency nominal effective exchange rate (NEER), the INR depreciated by 0.2 per cent (at end-March 2021 over the average of September 2020), while it depreciated by 1.4 per cent in terms of the 40-currency REER (Table IV.3). Equity markets extended their gains in December 2020 amidst better-than- expected GDP data for Q2:2020-21, expectations of swifter global economic recovery after the US stimulus package and the announcement of Brexit trade deal. The manufacturing PMI, on the other hand, expanded in February 2021 for the first time since April 2019, with March witnessing further expansion. Journal of Marketing (JM) develops and disseminates knowledge about real-world marketing questions useful to scholars, educators, managers, policy makers, consumers, and other societal stakeholders around the world.It is the premier outlet for substantive marketing scholarship. Domestic economic activity is widely expected to rebound strongly in 2021-22. In the currency markets, the US dollar appreciated in the first quarter of 2021 driven by rising bond yields while EME currencies faced depreciation pressures from bouts of capital outflows. 14 For corporate bonds, the daily difference in yields is used to capture the hysteresis effect. Merchandise exports expanded for the third month in a row in February 2021 (Chart III.15 a). The fiscal stimulus under AtmaNirbhar 2.0 and 3.0 schemes and increased capital outlays and the investment-enhancing proposals in the Union Budget 2021-22 will likely accelerate public investment and crowd-in private investment. The softening of inflation in respect of cereals and products, milk and sugar and confectionery also aided the easing in food inflation. 6 The Central government in February 2021 decided to bring the off-budget part of food subsidies on-budget, which has resulted in GDP contraction (-8.0 per cent) being notably higher than that (-6.5 per cent) in gross value added (GVA) in 2020-21. Rural demand is leading the expansion, and there is growing evidence of catch-up in urban demand. Although total expenditure is budgeted to grow by only 1 per cent, the increased focus on capital expenditure that has multiplier effects would boost overall investment and growth in the economy. In November, the Reserve Bank of Australia (RBA) cuts its policy rate by 15 bps to a new low of 0.10 per cent and reduced the target for 3-year government bond yields to the same level. In the run up to the December 2020 meeting, CPI inflation had increased to 7.6 per cent in October 2020 with food inflation surging to double digits across protein-rich items, edible oils, vegetables and spices on multiple supply shocks. The improvement in manufacturing activity in Q3 was driven by basic metals, chemical and chemical products, motor vehicles and electrical equipment. Sample size of households was 100, 60 and 60 for the villages 1, 2 and 3 respectively. A marketing firm determined that, of 200 households surveyed, 80 used neither Brand A nor Brand B soap, 60 used only Brand A soap, and for every household that used both brands of soap, 3 used only Brand B soap. In 2021-22, the growth in revenue expenditure excluding interest and subsidy payments has been budgeted at 4.8 per cent, considerably on the lower side as compared with 13.1 per cent in 2020-21 (RE), indicating lower support to aggregate demand (Table III.3). Overall, the analysis indicates that the OMO announcements during 2020-21 have cumulatively eased G-sec and corporate bond yields by about 20-25 bps each and the OIS rates by around 10 bps. In 2020, the average temperature of global land and ocean surfaces was 1.17C higher than the twentieth-century average of 13.9C, making it the second warmest year on record. Box II.1: CPI Goods and Services: Do they Converge after Shocks? Furthermore, central banks are in favour of formulating pro-active measures in moving towards a low-carbon economy while ensuring smooth monetary transmission over the long-term (Table V.1.1). Credit offtake improved in H2, with the momentum picking up beginning October and registering a positive growth (financial year basis) since November. Interest rates on longer-term money market instruments like 91-day Treasury Bills (T-Bills) rates and the 3-month certificates of deposit (CDs) rates also traded below the reverse repo rate, on an average, by 16 bps and 9 bps, respectively. Monetary Policy Committee: October 2020-March 2021. Ghosh, A. R., J. D. Ostry, and M. Chamon (2016), Two Targets, Two Instruments: Monetary and Exchange Rate Policies in Emerging Market Economies, Journal of International Money and Finance, 60, 172-196. Demand conditions also remain subdued for a longer period. Prices, however, corrected to around US$ 65 in the second half of March over concerns of demand faltering on rising COVID-19 infections and increase in crude stockpiles. Omdia: in 2022, Alphabet, Amazon, Meta, and Apple are on pace to take 68% of ~$500B in online ad revenue made by non-China companies, driven by video campaigns TV and film companies are racing to capture some of the marketing cash pouring into the likes of Food inflation has softened since December 2020, largely led by the sharp fall in prices of vegetables and moderation in prices of cereals. 11 The paired sample t-test determines whether the mean difference between two sets of observations in a large sample is zero. The INR remained under depreciating pressure till mid-November 2020 due to COVID-related uncertainty, risk aversion and capital outflows. Apart from these variables, the size of the OMO auction is included in the second regression (Reg-2). Actual outcomes in terms of the NSOs SAE overshot these projections by 250 and 600 basis points in Q2 and Q3, respectively (Chart III.2), which may be largely attributed to faster than anticipated reduction in new COVID-19 infections in the country. For India, the evidence suggests that prices of goods and services exhibit co-movement over time, i.e., the two series are cointegrated (Table II.1.1). These steps, along with fresh arrivals, led to onion prices moving into deflation during November 2020-January 2021. The latter brings about an instantaneous reduction in the banks cost of funds, and in turn, in the MCLR and the lending rates on fresh rupee loans (provided the spread over the MCLR remains relatively stable). Spending on transport, hotels and restaurants, recreation and culture, which together contribute around 20 per cent to PFCE, also began improving in Q4. While the decline in WADTDR on outstanding rupee term deposits of private sector banks (170 bps) exceeded that of public sector banks (124 bps) in the current easing cycle, the reduction in lending rates was higher for the latter group. Rapid mutations of the virus, concerns over the effectiveness of available vaccines and limited access to vaccines in many countries keep the near-term outlook clouded and the recovery remains fragile, incomplete, uneven and divergent. Robust collection of the goods and services tax (GST) and issuances of e-way bills suggest a strong upturn in domestic trading activity. Total tax revenue is budgeted to be higher in 2021-22 than in the previous year (Table III.4). Amongst other constituents of personal loans, consumer durable loans and credit card outstanding witnessed tepid growth while loans against gold and jewellery picked up significantly (Chart IV.19d). The government reduced the basic customs duty (BCD) on crude palm oil from 37.5 per cent to 27.5 per cent effective November 27, 2020 and then revised it to 32.5 per cent [including the Agricultural Infrastructure Development Cess (AIDC)] effective February 2, 2021. How many of the 200 households surveyed used both brands of soap? In Q4, surplus liquidity increased further to 5.9 lakh crore due to injection from forex operations and net OMO purchases, despite leakage through CiC and reduced government spending. The downside risks are mostly associated with a weaker than anticipated global and domestic demand in the case of another wave of infections and new mutants of the virus, fall in crude oil prices on weak demand and an early normalisation of supply chains. Higher imports and fresh arrivals of early rabi production in the market led to a sharp easing in prices during December 2020-February 2021, with a deflation of (-) 21.3 per cent in February 2021. al, 2021). Hence, the MPC decided to look through the inflation spike and unanimously voted to keep the policy repo rate unchanged. The ongoing normalisation of trade, both domestic and international, boosted railway freight traffic (Table III.11). The near-term growth outlook remains clouded with emergency transfer programs expected to unwind, while the more contagious COVID-19 P1 variant continues to spread rapidly weighing heavily on economic activity with the composite PMI reflecting contraction since January 2021. The Union Budget 2021-22 has announced measures targeted at infrastructure development in agriculture, rural areas, and fisheries by enhancing credit flow and improving supply chains for perishables while ensuring continuation of direct procurement of cereals by the government. In terms of the real effective exchange rate (REER), the INR depreciated between September 2020 and February 2021 in contrast to major EMEs (Chart IV.14b). The short-run dynamics show that the coefficient of the error correction term of the LWorld_stk is statistically significant with the correct negative sign implying that the stock prices adjust towards long-run relationship after a shock and that the estimated model is stable (Table V.1.1). 16 November: Worrying Outlook For Next 6 Months With 73% Expecting To Be Worse Off . The global composite PMI moderated during November-January within the expansion zone as the resurgence of infections across major economies pulled down services activity, especially in the contact-intensive industries. The estimates of Reg-1 indicate that, on an average, the OMO announcements soften G-sec, corporate bond yields and OIS rates by 2-3 basis points (bps) each (Table IV.I.2). There has been a significant easing in consumer prices due to lower pork prices on improved supply and favourable base effects. Yields firmed up from the second half of February in the wake of the sharp rise in US treasury yields and higher crude oil prices. While the price build-up in the core categories was similar to the historical average, considerable variation was observed across subgroups: transport and communication, pan, tobacco and intoxicants, personal care and effects, health and recreation and amusement exhibited substantially higher build-up than the long-term average whereas clothing and footwear, housing, household goods and services and education exhibited subdued build-ups (Chart II.14). The liquidity availed by banks under the scheme is to be deployed in corporate bonds, commercial paper and non-convertible debentures issued by the entities in five sectors16 over and above their investments in these instruments as on September 30, 2020. 8. High frequency indicators point to the growth momentum gaining strength in Q4 although the surge in COVID-19 infections in a few states in March 2021 imparts uncertainty to the assessment. In such a scenario, should the INR depreciate by 5 per cent from the baseline, inflation could move up by around 20 bps while GDP growth could be higher by around 15 bps through increased net exports (Charts I.11b and I.12b). The average level of the yield curve increased by 19 bps in H2:2020-21 and the slope steepened by 5 bps3 (Chart IV.8). With muted credit offtake, strong deposit growth and increased government market borrowings, banks augmented their SLR investments. Inflation in fertilisers remained muted in line with subdued cost of raw materials such as natural gas. The upside surprise in Q2 and Q3 largely stemmed from a better-than-expected performance in gross fixed capital formation. Hartley, J. S. and A. Rebucci (2020), An Event Study of COVID-19 Central Bank Quantitative Easing in Advanced and Emerging Economies, NBER Working Paper No. Read Now. On the positive side, credit to medium industries registered a robust growth of 21.0 per cent, reflecting the measures taken by the Government of India and the RBI for enhancing credit flows to the MSME sector. The five warmest years since 1880 have been only recently after 2015 (Chart V.1.1a). Hydro power generation continued to contract in Q3 and January-February 2021. In Q4, supply side factors turned benign pulling down headline inflation. Investment by these companies remained subdued (Table III.2). Looking ahead, heightened volatility in global financial markets, especially a snapback in global sovereign bond yields as observed in February 2021 could lead to a broader risk aversion to EME assets and net capital outflows. IV.3 Liquidity Conditions and the Operating Procedure of Monetary Policy. It also voted to continue with the accommodative stance as long as necessary at least during the current financial year and into the next financial year to revive growth on a durable basis and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remained within the target going forward. 4 All data, barring LWorld_GDP, were sourced from Bloomberg. Mining activity contracted further in January 2021. Base metal prices, measured by the Bloombergs base metal spot index, increased by 28.4 per cent between September 2020 and March 2021, surpassing pre-COVID levels on strong rallies witnessed in H2:2020. Monetary policy turned even more accommodative with expansion of asset purchase programmes and launch/extension of special liquidity programmes by central banks in most AEs and EMEs in Q4:2020. With the third wave of COVID-19 infections and the re-imposition of the state of emergency in the Tokyo area, however, the momentum for recovery slowed down in Q1, accompanied by large contractions in retail sales and industrial production in January and February. This necessitated further bond purchases by countries like Australia which practice yield curve control. The NPA ratios eased across all the major sectors over the same period (Chart IV.20b). The baseline projections of inflation and growth are conditional on the assumptions of key domestic and international macroeconomic and financial conditions described in the previous sections. In the overall non-food credit growth of February 2021, the relative contributions of personal loans and credit to the services sector were 2.7 percentage points and 2.5 percentage points, respectively (Chart IV.18c). The surveyed firms reported passing through the costs to their selling prices in Q4:2020-21. Domestic equities, however, witnessed cautious trading towards the end of the month due to uncertainty surrounding the outcome of the US presidential elections. In the case of a shock, gold prices are the quickest to adjust, followed by stock prices. It also launched a quantitative easing programme of purchase of government bonds of 5-10 years maturity worth AUD100 billion (approximately US$72 billion) to be carried out over six months. 12 Similar tests for OMO sales announcements suggest that there is no statistically significant difference in yields; hence the empirical exercise is confined to OMO purchases. First, global crude oil prices have hardened notably since November 2020 on the back of production cuts by the OPEC and non-OPEC allies (OPEC plus) and expected revival in demand with vaccine rollouts. During H2:2020-21, domestic financial markets continued to post recovery in market activity amidst easy liquidity conditions. Overall, the fiscal support to aggregate demand remained substantial in H2. The cancellation of the last scheduled G-sec auction for 2020-21 resulted in some moderation in yields towards end-March. In the US, however, bond yields have been inching up gradually from Q3:2020 on expectations of reflation (Chart V.8a). The prime motivation for the central banks is to mitigate financial risks on their balance sheets due to exposures to climate change related risks. Sales of non-IT services companies remained in contraction zone in Q3, albeit with some moderation. The debt to equity ratio of these firms dropped by 4.4 percentage points to 39.7 per cent in H1:2020-21, although it was still higher than its level in the previous two years. In November, the BSE Sensex gained by 11.4 per cent, supported by FPI inflows, positive developments on the vaccine and the Governments approval of a 1.5 lakh crore production-linked incentive (PLI) scheme for 10 manufacturing sectors. The Japanese economy expanded by 11.7 per cent (q-o-q, SAAR) in Q4, extending the third quarters recovery from the worst recession witnessed in the first half of 2020. Unit labour costs moderated from 6.9 per cent in Q2:2020-21 to 6.4 per cent in Q3:2020-21 for firms in the manufacturing sector and from 31.4 per cent to 28.5 per cent respectively, for the services sector firms (Chart II.22). A marketing firm determined that, of 200 households surveyed, 80 used neither Brand A nor Brand B soap, 60 used only Brand A soap, and for every household that used both brands of soap, 3 used only Brand B soap. The largest deviation between CPI and WPI emanated from inflation in petroleum products, especially in petrol and diesel, reflecting the wedge due to tax components. The rebound from the COVID-19 induced slump has been sharper than anticipated. Agriculture and allied activities remained resilient during 2020-21, partially offsetting the contraction in other components of GVA. 5 Data on sectoral credit relate to select banks accounting for around 90 per cent of the total non-food credit. Allied activities consisting of livestock, forestry and fishing which constitute about 44 per cent of the sector contributed about half of overall agricultural GVA growth in 2019-20 (Chart III.19). Inflation concerns are creeping up at a time when both monetary and fiscal policies are highly accommodative, there are promises of continued low rates for long and demand is recovering. All variables other than policy repo rate are growth rates. American Family News (formerly One News Now) offers news on current events from an evangelical Christian perspective. After the unprecedented contraction in Q1, real gross domestic product (GDP) recorded sequential upturn in Q2 and regained positive territory in Q3 with the ambit of the recovery broadening to encompass a wider spectrum of sectors since then. Note: Close (0): Announcement day closing; Open (+1): Next day opening; Close (+1): Next day closing. Price inflation in the goods component, i.e., excluding food, fuel, petrol, diesel, gold and silver (with a weight of 20.7 per cent in CPI) rose to 5.8 per cent in February 2021 from 4.7 per cent in August 2020, driven by health care goods particularly medicines, clothing and footwear goods and transportation goods like motor vehicles (Chart II.17a). Farm exports remained strong during Q3 and Q4 (January-February), benefitting from a surge in global demand and higher international food prices. On a financial year basis (up to February 2021), credit growth to the services sector accelerated at a modest pace (Chart IV.19b). 3 The concept of green swan used by Bolton et al. Negative values of FCIs denote easier financial conditions while positive values indicate tighter financial conditions. Subsequently, with the phased roll-back of the lockdown and easing of restrictions on movement of people and resumption of normal functioning of offices, the RBI decided to restore trading hours in a phased manner beginning November 9, 2020. Box III.1: Investment and Financial Conditions. Prices of sugar and confectionery (weight of 1.4 per cent in the CPI and 3.0 per cent in the food and beverages group) eased during September 2020 - February 2021 on the back of expectations of a bumper crop and higher domestic production even as international sugar prices increased due to concerns over lower global availability in 2020-21.9. The NGFS recommended integration of climate-related factors into prudential supervision and emphasised the importance of a robust and internationally consistent climate and environmental disclosure framework. The fiscal stimulus under AatmaNirbhar 2.0 and 3.0, coupled with increased allocation for capital expenditure under the Union Budget 2021-22, should accelerate public investment and crowd in private investment. Among other major AEs also, November 2020 was one of the best months on record in terms of gains. Inflation in onion prices, which was in negative territory during August-September 2020, witnessed substantial price pressures during September-November 2020 as excess rainfall in major producing regions of Madhya Pradesh, Gujarat, Karnataka and Maharashtra damaged the kharif crop and impacted late kharif production, resulting in lower market arrivals. How many of the 200 households surveyed used both brands of soap? The MPCs voting pattern reflects the individual members assessments, expectations and policy preferences (Table I.1). Nonetheless, the available data from different sources indicate that employment conditions have improved considerably in H2 (Chart III.5). The instantaneous announcement effect of OMOs is examined for the benchmark 10-year government securities, AAA 5-year corporate bonds (CBs) and 5-year overnight index swaps (OIS)10 using daily data on secondary market yields/ rates spanning 10 years (January 2012 January 2021) in an event study (ES) framework (Hartley and Rebucci, 2020). Thereafter, with an increase in fresh arrivals, prices eased beginning October 2020. Data pertain to 12 states out of 28 States and 3 Union Territories that have presented their Budgets for 2021-22. Five 14-day VRRR auctions of 2 lakh crore each were conducted in Q4, which were well received as reflected in the bid-cover ratio (bidding offers as a proportion of the notified amount) of 1.3 or more in each auction. Press Release. How many of the 200 households surveyed used both brands of soap? Congenial financial conditions are expected to continue supporting the recovery in fixed investment (Box III.1). Apart from the earlier noted ultra-accommodative monetary policy and vaccine news, the US markets were also boosted by the Presidential election results in early November and the additional fiscal stimulus packages in December and March. To meet any additional / unforeseen demand for liquidity and to provide flexibility to the banking system in year-end liquidity management, the Reserve Bank decided to conduct two fine-tuning variable rate repo auctions of 0.25 lakh crore each on March 26 and March 31, 2021 of 11 days and 5 days tenor, respectively. A marketing firm determined that, of 200 households surveyed, 80 used neither Brand A nor Brand B soap, 60 used only Brand A soap, and for every household that used both brands of soap, 3 used only Brand B soap. The random variable X counts the population households where women make the majority of the purchasing; Question: A marketing company surveyed 200 households and found that in 120 of them the woman made the majority of the purchasing decisions. First, an expansionary structural fiscal shock contributes to demand pressures and creates a positive output gap. The empirical evidence still supports the conventional wisdom that a long-run relationship holds between the financial markets and the real sector. The monetary policy stance affects the fiscal position through the interest rate channel (Escolano, 2010). 2020). For upcoming rabi marketing season (April-March), the government has set a target to procure 407.0 lakh tonnes of wheat, which is 2.3 per cent over and above the record procurement during the previous rabi season. 40 of them had both, a two-wheeler and a credit card, 30 had both, a credit card and a mobile phone and 60 had both, a two wheeler and mobile phone and 10 had all three. Item level retail and wholesale prices are aggregated at respective sub-group using item level CPI weights. A., Kushawaha, K.M., and I. Bhattacharyya (2021), Unconventional Monetary Policy in Times of COVID-19, RBI Bulletin, March, pp 41-56. The MSCI Emerging Market Currency Index, which increased by 5.3 per cent in Q4:2020, dipped by 1.1 per cent in Q1:2021. After some depreciation in November 2020, the INR appreciated to 72.29 on February 24, 2021 owing to sustained strong FPI inflows but depreciated somewhat thereafter due to elevated global financial market volatility on the back of rising US yields, firming global crude prices and moderation in FPI inflows. Against this backdrop, a preliminary examination has been undertaken to understand the drivers of stock markets at the global level. In addition to exclusion-based measures, trimmed means of inflation provide a measure of underlying inflation dynamics and are computed by statistically eliminating items with extremely positive and negative inflation. Stock markets reached record highs in a few jurisdictions in February 2021, despite output being well-below pre-pandemic path, raising concerns of a disconnect between the markets and the real economy and risks of future financial fragility (Box V.2). Manufacturing, services and infrastructure firms polled in Reserve Banks enterprise surveys15 reported an increase in salary outgo in Q4:2020-21, with expectations of a further rise in Q1:2021-22 as the level of employment is likely to gradually edge up. On the other hand, if the fiscal deficit shock is cyclical, it has a modest impact on inflation. The exchange rate will depreciate, inducing inflationary pressure (Chart I.1.1c). Resilient trade conditions as reflected in a strong pick-up in exports and high capital spending underpinned by significant government support led to the GDP expansion. 5 Cloud services, analytics and insights, cognitive business operations, internet of things (IoT) and quality engineering and transformation platform services led growth in the quarter. OMO auctions conducted by the central bank not only impact government bond yields but also have a significant effect on other financial instruments, given that these are priced off risk-free government bonds. Finally, the impact of capital flows depends, inter alia, on the RBIs decision to intervene and sterilise. The growth of e-commerce has provided an opportunity to understand why people participate in e-commerce activities and adopt information technology. Credit card outstanding and other personal loans, however, remained subdued (Chart III.3b). The Baltic Dry Index, which measures shipping costs for a wide variety of bulk commodities such as coal, iron ore, and grain, rose sharply in January and February 2021 due to firming container shipping freight rates and an unfavourable base effect (Chart V.2b). The resurgence of commodity price inflation, supported by abundant global liquidity, has fuelled reflation trade in global financial markets. Black swan events are rare and unexpected events with low probability but heavy impacts. On the other hand, easy monetary conditions and the firming up of asset and crude oil prices contributed positively to the deviation of inflation from trend levels in Q3 and Q4. For 2021-22, the consolidated GFD (for 12 states for which data are available) is budgeted at 3.7 per cent of GSDP during 2021-22 as against 4.2 per cent in 2020-21(RE) (Table III.5). A marketing firm obtained random samples of 20 people in five regions of the country to investigate the level of interest in a new product. The overall period has been divided into three phases, viz., pre-lockdown (January 2012 to February 2020), lockdown (March 2020 to May 2020) and post-lockdown (June 20 to December 2020). Motorcycle sales have remained in expansion zone since August 2020 (Chart III.4). In Q3, actual inflation was 100 basis points (bps) above projection (Chart II.2). This is consistent with the cross-country evidence (Peach, 2004). The major upside risks include supply chain disruptions persisting for a longer period, rise in global crude oil and other commodity prices beyond what is currently in the baseline, and stronger pass-through of input costs amidst improvement in demand conditions and return of pricing power. The disinflation during the post-FIT period was also supported by favourable supply shocks, both food and fuel, benign external factors and prudent fiscal policy (Chart I.1.2). Professional forecasters polled in the March 2021 round of the Reserve Banks survey expected a sharp uptick in real GDP growth in Q1:2021-22, driven by base effects before tapering in subsequent quarters (Chart I.9 and Table I.4). In currency markets, the US dollar weakened further in Q4:2020. In the post-lockdown period, however, CPI goods inflation (with a weight of 76.6 per cent in the CPI basket) exceeded CPI services (weight of 23.4 per cent) inflation substantially, with the gap increasing from 2.2 percentage points in June 2020 to 3.8 percentage points in September 2020. 12 out of 23 industry groups entered positive territory in Q3 as compared to only 5 groups during Q2. The sharp upward movement of inflation to a peak of 7.6 per cent in October 2020 came about from a pick-up in price momentum in food as well as in the core category.2 Thereafter, strong favourable base effects brought about a moderation in headline inflation to 6.9 per cent in November 2020, more than offsetting positive momentum in all these components. Lingering supply chain disruptions, rising global crude oil prices and stronger pass-through of input costs could push headline inflation above the baseline. *: Latest data on WADTDR and WALRs pertain to February 2021. Available at: https://www.ipcc.ch/sr15/. Four additional Pandemic Emergency Longer-Term Refinancing Operations would be conducted in 2021. Global commodity prices have been rising since May, after recovering from a plunge in the early part of 2020. 3 While the level is the average of par yields of all tenors up to 30-years published by FBIL, the slope (term spread) is the difference in par yields of 3-months and 30-years maturities. Hatzius, J., Hooper, P., Mishkin, F., Schoenholtz, K., Watson, M. (2010), Financial Conditions Indexes: A Fresh Look after the Financial Crisis, NBER Working Papers, No. This chapter examines recent proposals to use the blockchain, the underlying database that records and verifies Bitcoin transactions, as a mechanism to secure, authenticate and commodify digital culture. The ways and means advances (WMA) limit for the central government has been fixed at 1.20 lakh crore for H1:2021-22 to enable seamless bridging of intermittent mismatch between receipts and payments on account of leads and lags. The average inter-state spread on securities of 10-year maturity (fresh issuance) was 11 bps in H2 as compared with 9 bps in H1:2020-21. 9 The Reserve Bank also conducted six auctions of simultaneous purchase and sale of securities under open market operations (special OMOs) during this period. (yrs 3-4) Education We have a reliable team that is always available and determined to help all our clients by improving their grades. Turning to the outlook, the evolution of key macroeconomic and financial variables over the past six months warrants revisions in the baseline assumptions (Table I.2). So, if we let x = Both, then 3x = B only. Excess SLR holdings increased to 11.4 per cent of net demand and time liabilities (NDTL) on February 26, 2021 from 8.2 per cent at end-March 2020 (Chart IV.22). Section 45-ZA of the RBI Act, 1934 requires that the Central Government shall, in consultation with the Reserve Bank of India (RBI), determine the inflation target in terms of consumer price index (CPI), once in every five years. In H2, public administration, defence and other services (PADO) expanded marginally from the contraction in H1, driven by government revenue expenditure on public administration. The interest rates on the various small savings instruments, after being lowered sharply during Q1:2020-21 in alignment with the formula-based rates, were left unchanged during the remaining quarters of 2020-21 and Q1: 2021-22. Reflecting these measures, as well as the arrival of kharif pulses and favourable base effects, pulses inflation moderated to 12.5 per cent in February 2021 from 18.3 per cent in October 2020. 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