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Chinoy will discuss the ways in which the Indian economy should be looked at in times of inflation, constraints to growth, and persistent global risks.
As concerns mount over a developing financial sector crisis after the collapse of three mid-sized banks in the US, and the acquisition of Credit Suisse by UBS, the spillover effects of these developments on emerging economies are being closely monitored. The financial sector developments come in the wake of rapid tightening of monetary policy globally to fight back multi-decade high inflation particularly in developed economies. Earlier this month, the US Federal Reserve hiked its federal fund’s rate target range by 25 basis points with markets expecting another rate hike of a similar quantum in the next meeting in May.
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In India, the Reserve Bank of India’s Monetary Policy Committee is seen increasing the repo rate by 25 basis points in its next policy review on April 6. If this happens, it would take the total quantum of rate hikes by the RBI to 275 basis points since May 2022.
Amidst the banking sector crisis in the US and Europe, Finance Minister Nirmala Sitharaman had met heads of public sector banks on Saturday and asked them to remain watchful of the global developments and take measures to protect themselves against any financial shocks. While government officials have maintained that they do not expect the spillover effects of a crisis, an exogenous financial sector shock would be a huge concern at a time when India’s growth is seen slowing down from an estimated 7 per cent this financial year to 6.4 per cent in 2023-24, as per the RBI’s latest forecast.
While the Federal Reserve continues to hike policy rates, despite extreme stress in the banking sector, is a hard landing inevitable? What implications does it have for India? What are the multiple channels through which global risks will be transmitted to India? Is India, where inflation continues to be over 6 per cent andthe RBI continues to tighten the monetary stance, better placed to manage the fallout of what could be a global crisis?
To discuss this and more, and what the next financial year holds for India and the rest of the world, listen to the session of Explained with Sajjid Chinoy, Chief India Economist, JP Morgan, and Part-Time Member, Prime Minister’s Economic Advisory Council.
Chinoy will discuss the ways in which the Indian economy should be looked at in times of inflation, constraints to growth, and persistent global risks. He will be in conversation with Executive Editor P Vaidyanathan Iyer.
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