Nine and a half percent projection still intact given concerns about rising oil prices for instance.
Yes. So we have recently devised India's GDP growth of 4 5 22 at nine point five percent. But this revision was largely on
account of better than expected a company in the September quarter as the UBS in the lead indicator which is known as an
activity tracker it basically recovered by sixteen point eight percent on a sequential basis which is quarter on quarter on
progressively opening of the economy for the second week after contracting eleven percent quarter on quarter in the June
quarter. So I would say yes the recent supply side disruption including high global commodity prices especially oil and the
domestic oil shortages could weigh on India's fragile economic recovery. But at the moment we have to be comfortable with a
nine point five percent annual GDP growth forecast. So what's the threshold for oil prices before India's GDP gets
hit. OK so if you look at what is happening on the globalized prices
that almost cut people since I'm the oldest lose an annual three year high. Now in the ISE and net oil imports all I would say we
import eighty four percent of our oil equipment. So any sustained rise in global crude oil prices is a negative shock to
the economy. So we can see a wider deficit a high inflation and a weaker currency. But I guess at this point in time now and
we're seeing higher oil prices the one thing which I would be incorporating a lot happens in gas St. Louis position. And the
sensitivity is that every dollar on by the average increase in a global crude oil price. Why does in the US go into account
deficit by point five percent of GDP. So I would say if oil prices are headed towards hundred dollars a barrel which is not
our base case the current account deficit in India could actually widen to 3 percent of GDP. And in such a scenario.
These a risk that I not good on at them brutally basis or a 78 against the dollar. But again in a best case at UBS we are still
estimating Brent at sixty seven dollars a barrel by aimed March 2022 and we will see a light 2007 and two dozen ETF.
Yeah. I think you need to monitor this consumption boom that we've been talking about with Reliance with ICICI Bank. We're
seeing that retail is coming back in a very big way. You could say it's kind of a revenge spending so to speak. How how long
lasting can that be given just the inflation risk out there. I would say it could be a next. So to quote the story that this
is December 1 the March quarter story. So what we are seeing is that there is a pent up demand especially as more people are
getting vaccinated and it's getting visible in both the goods and services consumption. So top 20 percent of India's
population accounts for almost 60 percent share in discretionary consumption. And what we are seeing is that as people are
getting vaccinated in the fall. So the precautionary savings which we saw during the pandemic beat it is now beginning to
getting spanked. In fact we recently did UBS evidence lab Soviet baby you know so we. Fifteen hundred Indian consumers. And it
basically indicated the same train that affluent Indians who received income continued during the pandemic beat. It could
support the ongoing festive season the month. So I would say next three to six months the pent up demand story is definitely
going to sustain. Right. And you take a look at indicators like luxury car sales
for example and you're seeing that this recovery is being driven by the rich. At what point then Tammy are we going to see more
of a broad based recovery. OK so what a broad based recovery. Right now I would say the bulk of the recovery is led by
consumption. The second is public apex because there's a lot of effort being pushed by the government on boosting CapEx and
towards exports. So the goods export. So no I lost 25 percent above the pre pandemic beat. So the key question is as India
moves towards 2022 what is going to drive India's growth story as this pent up demand kind of fizzle out maybe because of
inflation because of uniform savings being spent in that sense. I think the key question is whether India Keynes again see some
kind of scape IBEX led recovery. We are not expecting any private corporate game because you don't go down any time soon.
So the recovery either has to be made by the public apex that doesn't go Amanda Lang pushing on infrastructure and keep
expense or led by the residential real estate recovery because we are seeing that the elements of mortgage rate are you know
close to a decade long which could be supportive of some recovery in the real residential real estate.
It the question then we heard from the finance minister speaking to Bloomberg recently saying that there's not really a hurry to
withdraw the pandemic driven stimulus. You also have an RBI that seems to be more leaning towards maybe easing. I'm just
wondering how long do you think fiscal and monetary policy can stay accommodative.
OK so I would say on the monetary and fiscal policy right now I'm not moving any in to support this fragile economic recovery
because even if we saw a reshape recovery both the second wave the economic recovery is not very strong. As you just discussed
it's not broad based led by a couple of sectors. And we have seen unorganized and the informal economy thinking you know bulk
of them during the pandemic which is yet not reflected in the report. The GDP numbers. So we are estimating RBI to begin the
process of policy normalization that is moving to a neutral stance or the reverse repo rate hike likely in the first quarter
of next year. So beginning the Fed policy is when we are estimating the first step towards policy normalization to begin
from the government's policy perspective the fiscal policy. If you look at beyond estimating the deficit to consolidate this
deal not because a government is doing any expenditure cuts more because of the many collections having no quite or point. So I
would say the fiscal and monetary policy consolidation is something you should start to see beginning from OMXS.