Times of india rate card 2013 pdf

For the six announcements for which the decline in yields was statistically significant, the duration and magnitude of the announcement effect on intra-day yields can be examined by the average difference in yields at intervals of 15 minutes post-announcement from that of the average yield an hour prior to the auction announcement.

The maximum average impact is found fifteen minutes after the announcement with a moderation of about 4 bps in yields from the average of the hour before announcement Chart IV. An hour after the announcement, the moderation in yields turns statistically insignificant.

In order to explore the impact of the actual auction outcome on yields and their persistence in an event study framework Hartley and Rebucci, , an autoregressive AR model is estimated, based on data spanning December August , for daily changes in year bond yields G-sec as well as corporate bonds separately regressed on LTRO and TLTRO auction dates as dummies with controls for other key variables that can impact yields, viz.

The reduction in the policy rate from 5. Overall, the measures undertaken by the Reserve Bank had a sobering impact on yields and risk spreads, which helped in easing market stress and softening financing conditions. Hartley, J. After undergoing intense volatility in Q following the COVID outbreak with a massive disruption in business activity, the Indian equity market made a strong V-shaped recovery in H The BSE Sensex gained Strong rallies in global equity markets on the back of massive fiscal and monetary stimuli in major countries and the measures undertaken in India boosted domestic market sentiments.

In Q, the equity market had posted its biggest monthly gain in 11 years in April , with the BSE Sensex increasing by In the later part of April, the closure of six debt fund schemes by a mutual fund weighed adversely on domestic market sentiment. Bearish sentiments gripped the stock market in early May, with the Sensex declining by points 5. The recovery continued in July and August on the back of positive news from encouraging trials of the coronavirus vaccine and hopes of more supportive measures by national authorities globally.

On the domestic front, the rally in equities was also supported by improvement in the manufacturing PMI for June , reports of disengagement between India and China over border issues and better than expected Q corporate earnings results.

The stock market plummeted sharply in the last trading session of the month due to fresh escalation in Indo-China border tensions and witnessed cautious trading ahead of the implementation of new trading norms on margin requirements by the Securities and Exchange Board of India SEBI from September 1, Investor sentiment remained insipid in September amidst concerns over steady increase in coronavirus infections and weak global cues.

After registering moderate gains due to improvement in domestic manufacturing PMI for August , equity sentiments turned negative with the BSE Sensex witnessing its biggest intra-day fall in more than four months on September 24 as spike in infections in some European countries triggered fears of a second round of lockdown.

Bullish sentiments, however, returned towards the end of the month amid expectations of further stimulus measures by the government. During H, FPIs turned net buyers in the Indian equity market after panic sales in March due to flight to safety.

A cross-market barometer illustrates vividly the recovery in financial markets from the disruptions caused by the pandemic. The barometer presents four different stages after the declaration of the COVID pandemic by construction, a decreasing tendency indicates recovery of the market segment. In response to the gradual opening of the economy and the proactive measures taken by the Reserve Bank and the Government, an improvement in sentiments in the foreign exchange and stock market indicators took hold from May onwards.

Money and bond market spreads started easing following i the introduction of the new benchmark paper on May 8, ; ii the announcement of Atmanirbhar Bharat stimulus package by the Government; and iii policy rate cut of 40 bps on May 22, During H, bank credit offtake was anaemic, reflecting weak demand and uncertainty in the wake of the pandemic.

Non-food credit growth y-o-y at 5. The slowdown in credit growth was spread across all bank groups, especially foreign banks. Credit growth of the public sector banks remained modest, although with some uptick since March Chart IV. Of the incremental credit extended by the scheduled commercial banks SCBs on a year-on-year basis September 27, to September 25, , The deceleration in non-food credit growth was broad-based with credit offtake slowing down in all the major sectors.

Though personal loans and credit to agriculture registered some improvement in July , the momentum could not be sustained in August. Credit growth to services and industrial sectors has also tapered off after showing some promise in Q1; Chart IV.

Personal loans accounted for the largest share of total credit flow in August , followed by services. While the share of personal loans, services and agriculture increased in August vis-a-vis the previous year, the share of industry contracted Chart IV.

Within industry, credit growth to food processing, mining and quarrying, petroleum, coal products and nuclear fuels, leather and leather products, wood and wood products, and paper and paper products accelerated in August as compared with a year ago. In the services sector, credit growth to computer software picked up significantly in recent months, reflecting the increased use of digital technology during the COVID period Chart IV.

Credit to the NBFC sector decelerated to In the personal loan segment, growth in vehicle loans accelerated from 3. The share of trade in non-food credit flow increased sharply in August vis-a-vis its level in the corresponding month of the previous year Chart IV. Adjusted non-food credit growth decelerated from 8. Banks augmented their SLR portfolios in the wake of deceleration in credit offtake and higher government borrowings.

Consequently, excess SLR maintained by all scheduled commercial banks increased to The transmission of policy repo rate changes to deposit and lending rates of banks improved since the April MPR.

The weighted average lending rate WALR on fresh rupee loans declined by 91 bps since March in response to the reduction of bps in the policy repo rate and comfortable liquidity conditions Table IV. The WALR on outstanding rupee loans declined by 46 bps during this period, but this transmission is an improvement over the earlier period. Of the bps reduction in the weighted average domestic term deposit rate WADTDR on outstanding rupee deposits during the ongoing easing cycle i.

The median term deposit rate, which reflects the prevailing card rates, has registered a sizable decline of bps since March , reflecting the combined impact of surplus liquidity, the introduction of external benchmark-based pricing of loans and weak credit demand conditions Chart IV.

Apart from the reduction in term deposit rates, many banks also lowered their saving deposit rates during the current easing cycle. The saving deposit rates of five major banks, which ranged 3. The flexible adjustment of saving deposit rates bodes well for monetary transmission to lending rates in comparison to the rigidity characterising saving deposit rates in earlier years.

The decline in both the lending and deposit rates is more pronounced for foreign banks Chart IV. The deposit base of foreign banks is primarily made up of low cost and lower duration wholesale deposits, which adjust quickly to policy rate changes. On the other hand, the public sector banks depend more on retail term deposits and face competition from alternative saving instruments like small savings, which constrains them from lowering rates in sync with the policy rate.

The 1-year median marginal cost of funds-based lending rate MCLR charged by public sector banks and private sector banks declined further during H Chart IV. In personal loans, the spread was among the lowest in respect of housing loans, reflecting lower defaults and the availability of collateral. Personal loans - other than housing and vehicle loans - are mostly unsecured and involve higher credit risk; hence, the spread charged was the highest for other personal loans.

The lower WALRs on rupee export credit reflect the interest rate subvention provided by the government. There has been a significant improvement in transmission to all new loans sanctioned since October when the new floating rate loans to retail and MSME sectors were mandatorily linked to the external benchmark Chart IV. The introduction of external benchmark linked loans has incentivised banks to adjust their term as well as saving deposit rates in line with the benchmark rates to protect their net interest margins NIMs.

The reduction in term deposit rates applies only to fresh term deposits, while it is across the board in the case of saving deposits. Thus, the impact of introduction of external benchmark-based pricing of loans on monetary transmission has encompassed even sectors that are not linked to external benchmark loan pricing. In respect of fresh rupee loans linked to the policy repo rate, the median spread charged by domestic banks was the highest in the case of other personal loans, followed by that for the MSME sector, whereas housing loans have the lowest spread.

Among the bank groups, the median spread charged by public sector banks for different categories of loans was lower than those of private sector banks Table IV.

Administered interest rates on small savings are linked to market yields on G-secs with a lag and are fixed on a quarterly basis at a spread of bps over and above G-sec yields of comparable maturities.

After lowering these rates sharply during Q 21, small saving interest rates were left unchanged for Q and Q notwithstanding the decline in G-sec yields during the reference period, resulting in a wedge of bps in Q2 and bps in Q3 in respect of various small savings instruments relative to the formula-based rates, with implications for monetary transmission Table IV. The RBI Act requires the RBI to place the operating procedure relating to the implementation of monetary policy and changes thereto from time to time, if any, in the public domain.

During H, liquidity management operations by the RBI were conducted as per the revised liquidity management framework introduced on February 14, and guided by the need to expand liquidity in the system sizeably to ensure that financial markets and institutions function normally in the face of COVID-related dislocations, consistent with the monetary policy stance see Chapter III of Annual Report for details.

In view of the COVID pandemic and its adverse impact on real economic activity, the Reserve Bank reduced the policy repo rate by 40 bps on May 22, on top of a 75 bps reduction on March In order to make it relatively unattractive for banks to passively park funds with the Reserve Bank and to encourage their deployment for on-lending to productive sectors of the economy, the policy interest rate corridor was widened to 90 bps through a reduction of 25 bps in the reverse repo rate on April 17, Liquidity augmenting measures initiated since February were further reinforced during H, including those targeted at specific sectors and entities to alleviate liquidity and funding stress Box IV.

As a special case, standalone primary dealers SPDs were allowed to participate in these auctions along with other eligible participants. The facility was available till April 17, This dispensation was available up to September 25, Banks that had availed of funds under LTROs at 5.

During H, the key drivers of systemic liquidity were currency in circulation CiC , net forex operations by the Reserve Bank and Government of India GoI cash balances. The large expansion in CiC was the major source of leakage, particularly during Q1.

Liquidity was augmented by a large drawdown of excess CRR balances by commercial banks consequent to the one percentage point reduction of CRR. The large scale of CiC expansion indicates heightened precautionary demand for cash in a pandemic-stricken environment. Surplus liquidity conditions persisted in Q2, although with some moderation relative to Q1.

Summing up, systemic liquidity surplus increased during H reflecting the conventional and unconventional measures by the Reserve Bank to ensure conducive financial conditions and stability in financial markets and institutions. Domestic financial markets have gradually regained normalcy in the wake of sizable conventional and unconventional measures by the Reserve Bank. Turnover in various market segments is increasing and spreads have narrowed appreciably. The return of capital inflows is an indicator of growing investor confidence in the Indian economy.

The pace of monetary transmission has also quickened, but credit growth remains feeble, clouding the outlook. Efficient monetary policy transmission, particularly to the credit market, would continue to assume priority in the hierarchy of policy objectives.

Bloom, N. Louis website. Even as high frequency indicators suggest that the economic activity may have begun to bottom out in Q3, the near-term outlook remains hostage to the virus and the attendant uncertainty regarding its vaccine. Monetary policy remained highly accommodative with key policy rates reduced to their lowest level in most countries.

Global financial markets remained buoyant, supported by signals that the highly accommodative monetary policy would continue for long. The pandemic has plunged the global economy into its deepest contraction in history in Q World merchandise trade volume contracted by Just as various economies were engaging in unlocking activity, and a general sense emerging of the global economy stabilising and getting poised for a recovery in Q3, fresh waves of infections have surged, threatening these positive impulses.

Meanwhile, commodity prices have firmed up, pushing up inflation. Although headline and core inflation remain subdued and below target in several economies, food price pressures are firming up. Global spillovers have accentuated, mainly through financial channels. Although financial markets have recovered from the panic sell-offs in Q and capital flows to EMEs have resumed on the return of risk sentiment, asset prices are volatile, out of alignment with underlying fundamentals, and the outlook is uncertain.

Monetary policy guidance from systemic central banks has led to weakening of the US dollar with corresponding appreciation in other currencies, especially EME currencies, with implications for export performance and growth. In addition, disruptions in global value chains GVCs have amplified supply shocks inflicted by the pandemic. Some near-term indicators have improved. The recovery, however, is nascent and hinges on the duration of the pandemic and discovery of the vaccine. Underlying the stabilisation of financial markets, the easing of financial conditions and the hesitant recovery is the unprecedented policy response of monetary and fiscal authorities.

These actions have led to a renewal of risk appetite and search for yields, slowing the precautionary flight to cash. Notwithstanding this defence, the outlook is highly uncertain, policy space is largely used up and the virulence of the pandemic is yet to abate for recovery to gain traction. Coming on the heels of a 5. Most US states imposed complete shutdowns in April and for most part of May with only gradual and uneven reopening and relaxation in preventive measures towards the end of the quarter.

While the unemployment rate has declined markedly from an all-time high in April, it remains much above the pre-COVID level. Industrial output continued to contract through August, though the momentum appears to be picking up as reflected in robust growth in retail sales since end of Q2.

The manufacturing PMI moved back into expansion zone from June. The recent resurgence of COVID cases has increased downside risks as many states hold off or reverse unlocking. Economic activity in the Euro area plunged at a record pace in Q2 as frozen business and household activity caused by stringent lockdowns and social distancing measures inflicted an unprecedented blow to all constituent economies. GDP of the Euro area contracted by Industrial production and retail sales collapsed, while employment situation and consumer sentiments worsened in April-May as most member countries adopted extensive and prolonged lockdown measures to fight the health crisis.

With retail sales improving in June and the composite PMI moving back into the expansion zone in July, the Euro economy exhibited signs of recovery in the early part of Q3. However, the momentum has slowed down as increase in fresh wave of infections prompted some countries in the region to reinstate restrictions.

The Japanese economy contracted by Furthermore, plummeting exports on disrupted supply chains and weak external demand led to further deterioration in economic conditions. While gradual reopening, both domestically and abroad, has eased demand and supply conditions and helped stabilise manufacturing activity, available high frequency indicators remained in contraction zone through August.

The UK economy fell into a technical recession in Q2 as prolonged confinement measures weighed heavily on economic activity. While the economy rebounded in June as gradual withdrawal of restrictions released pent-up demand, it was not strong enough to offset the magnitude of economic slack that the country experienced during the period of complete shutdown. The recovery continued into Q3 as both manufacturing and services PMI strengthened since July on robust output and new orders, reflecting improved consumer and business spending.

The unemployment rate, however, remains high and investment intentions have remained weak. In September, some lockdown measures were re-imposed as a second wave of infections hit the UK. The turnaround was spearheaded by rising investment in infrastructure, supported by government spending, and increase in exports of medical products and electronics.

The uptrend continued into Q3 as exports improved further since July amidst a modest improvement in external demand, and industrial production remained stable despite heavy floods experienced in some parts of the country. Manufacturing activity as measured by the manufacturing PMI recorded expansion in each month since May, supported by rising output and new orders. On the other hand, retail sales remain weak on depressed private consumption under social distancing measures.

While the Chinese economy is expected to maintain the pace of its recovery, the prolonged global downturn, re-escalating tensions with the US and persistent risk of a second wave of COVID infections remain major headwinds, going forward. The Russian economy shrank in Q2, birched by the pandemic induced lockdowns and sharp fall in oil prices. All sectors, barring agriculture, were severely impacted amidst stringent measures adopted to stem the pandemic. Industrial production and retail sales contracted through August on muted business and consumer confidence, while the unemployment rate has risen.

The Brazilian economy entered into a technical recession in Q2, following sharp declines in household consumption, industrial and services sector activity.

The growth outlook remains clouded as external demand is expected to remain weak, while domestic spending and industrial activity are likely to stay subdued with social distancing measures in place. The South African economy experienced a severe disruption in Q2, the steepest on record, as industrial production and retail sales plummeted to record low levels in April and remained in contraction through the entire quarter. South-East Asian countries also registered sharp contraction in Q2, in tandem with other major EMEs and AEs as economic activity came to near standstill following widespread lockdowns.

The global composite PMI moved back to the expansion zone in July and improved further in August and September after remaining in contraction for five months and a record low level in April. The revival in output and new orders as also improved business optimism, led the recovery Chart V.

Forward looking indicators also suggest a tentative nascent recovery in world trade. However, uncertainty over a possible recovery remains a cause of concern due to rise in fresh virus cases in some parts of Europe, along with the rapid spread in major EMEs. The pandemic has also exposed the integrated global economy to significant supply chain disruptions reconfiguring the global value chains Box V.

Box V. After the s, international trade proliferated on the back of the rise of global value chains GVCs which contributed to increase in productivity and came to be viewed as a fast track to industrialisation for the emerging market economies Baldwin, ; Ignatenko et al. After the global financial crisis, however, GVCs slowed down with the confluence of protectionist trade policies. More recently, COVID has accentuated the contraction in global trade volumes with major supply disruptions — around 80 countries have imposed export restrictions and prohibitions on medical supplies and pharmaceuticals WTO, A survey of 23 industry value chains conducted by Mckinsey Global Institute revealed that the semiconductor industry, followed by communication equipment, medical devices, pharmaceuticals, aerospace, automobile, machinery and chemical industry would be the most affected by trade-related disruptions Chart V.

The apparel industry followed by aerospace, furniture and petroleum products, transport, automobile and textile would be exposed to higher risks during the pandemic Chart V. It identifies three sectors, viz. The extent to which a country is integrated into these supply chains can be measured by the GVC participation index, which is a sum of backward and forward linkages. With the pandemic expected to diversify the supply chains from the current manufacturing hub, beneficiaries could be countries such as Vietnam, Mexico and India.

The determinants of GVC participation such as economic fundamentals, factor endowments, geography, market size and institutional environment can be examined in an empirical framework Fernandes et al. X represents a vector of trade policy related explanatory variables viz. Variable T t controls for time fixed effects. The decomposition of backward participation reveals that better logistic performance, higher capital endowment, stable political environment and higher FDI are central to strengthening backward linkages in the supply chain.

These results assume significance in the context of several initiatives to strengthen logistic infrastructure through national trade facilitation plan which aims to transform the trade ecosystem by reducing the time and cost of doing business. Consequently, relaxation in local procurement norms for single-brand retail trade has generated interest among global tech and retail giants such as Apple and Ikea.

Lower tariff rates and better connectivity with the GVC hub can also contribute to stronger backward linkages. However, the estimates also show that countries with a larger domestic industrial capacity exhibit lower backward participation as they may rely less on imported inputs and use more domestic inputs for exports Chart V.

Countries with better performance in logistics, lower distance from the GVC hub and greater land and natural resource endowment exhibit significantly stronger forward participation than peers Chart V. Countries seeking to expand foothold in GVCs need to lower trade barriers, demonstrate higher reliance on regional or free trade agreements, provide cutting edge logistics infrastructure, increase industrial capacity and strengthen political stability.

Baldwin, R. Fernandes, A. Kee and D. Ignatenko, A. Raei and B. Global commodity prices fell sharply in March-April, with oil prices plunging to record lows as lockdowns across countries depressed demand. From May, however, prices recovered as demand prospects improved following the gradual withdrawal of lockdown restrictions. The Bloomberg commodity price index increased by Global food prices eased since February before witnessing some uptick in June on the back of rising vegetable oil, dairy products and sugar prices.

Excess stockpiles amidst weakening external demand, diminishing restaurant sales and reduced demand from food manufacturers resulting from COVID restrictions, pulled down prices for most food products between February and May. However, since June, food prices have edged up as global import demand improved, while export supplies tightened due to weather shocks and production slowdown across major producing countries Chart V.

Crude oil prices have increased since then, recouping April losses, as optimism on demand following gradual withdrawal of lockdown in some countries and continued production cut by major energy producers buoyed sentiments. Oil price firmed up for the larger part of August on news of falling inventories and recovery in fuel demand. However, the rally lost steam in September as fears of a second wave of COVID infections, lack of visibility of the expected demand recovery and ramping up of production by some smaller OPEC members changed expectations again Chart V.

Gold prices remained elevated, increasing by almost In the US, inflation measured by the personal consumer expenditures PCE price index eased during February-June on the back of subdued aggregate demand and lower consumer energy prices. Although it has edged up since June, the pick up has been modest and drawing strength from the recovery in spending for consumer goods and services due to resumption of activities.

In the Euro area too, actual inflation remained much below the target as prices have edged down since March and inflation rate slipped below zero since August on falling prices of energy products and non-energy industrial goods. In Japan, CPI inflation remained subdued, despite a slight uptick in July, on weak core consumer prices and inflation expectations.

CPI inflation across major EMEs eased during March-May on weak demand and depressed global crude oil prices, but has recorded modest increases since June. Nonetheless, it remained below pre-COVID levels and even below central bank targets for some economies. In China, consumer price inflation edged up in June-July on higher food prices resulting from an increase in pork prices and supply disruptions caused by floods. However, it fell in August as supply disruptions eased, restoring demand-supply balance.

CPI inflation in Russia, unlike its peers, has been increasing since March, with only a modest drop in May. Increasing food, non-food and services prices amidst supply disruptions and the gradual release in pent-up demand as also weak ruble, supported the uptrend. With the onset of the pandemic, fiscal authorities around the world have unveiled stimulus packages to overcome the downturn. Central banks have also provided unprecedented monetary accommodation.

The key policy rates are at their lowest level in most countries. One important difference is that while the AE central banks used up the limited policy space available to them in March, the EMEs continued to cut rates through Q2 and Q3 of In August , following a comprehensive and a public review of its monetary policy strategy, tools and communication practices, the Federal Reserve announced its new monetary policy strategy under which it seeks to achieve inflation that averages 2 per cent over time.

Since June, the Fed has indicated that it would continue asset purchases at the current pace over the coming months to sustain smooth market functioning. In its September meeting, the first after the adoption of the new monetary policy framework, the Fed stated that it would keep the target range for the federal funds rate at Some facilities 1 that were to expire in September have been extended up to December , while the temporary US dollar liquidity swap lines and the temporary repurchase agreement facility for foreign and international monetary authorities FIMA repo facility have been extended up to March There were no new announcements in the two meetings in Q3.

The Bank of Japan BoJ has also not changed key rates in response to the pandemic. The limits on additional purchases of commercial papers and corporate bonds were enhanced. In May, it introduced a new measure under these operations for fund provisioning against interest-free and unsecured loans.

There were no new announcements in its meetings held in Q3. The Bank of Canada BoC has maintained a pause on the policy rate at 0.

In April, the BoC announced new measures for provincial bond and corporate bond purchases, a temporary increase in weekly purchases of Treasury bills and enhancement of funding under term repo facility to two years. The Reserve Bank of Australia RBA maintained the targets for the cash rate and the yield on 3-year Australian Government bonds at 25 basis points each in its monthly meetings held during Q2 and Q3 of In September, the RBA announced an increase in the size of its term funding facility and extended it up to June Both reduced their policy rate by 25 bps each in May to 0.

EMEs, on the other hand, continued to cut rates well into Q3. Prior to the policy decision in April, the PBoC had reduced the interest rate on excess reserves to a record low of 0. In May, the PBoC lowered the reserve requirement rate for all large financial institutions by another basis points to 11 per cent.

The central bank of Brazil reduced the Selic rate by 75 bps each in May and June, following it up with a 25 bps cut in August as inflation remained below the target. The central bank of Brazil took a pause in its September meeting, the first after nine consecutive rate cuts since August The Bank of Russia cut its policy rate by 50 bps, bps and 25 bps in April, June and July, respectively before pausing in September.

The South African Reserve Bank cut its policy rate by bps, 50 bps and 25 bps in April, May and July, respectively, as overall risks to inflation outlook remained balanced and took a pause in September Chart V.

The central bank of Turkey cut its policy rate by bps in April and 50 bps in May and maintained a pause thereafter. In August, the central bank increased the Turkish Lira and forex reserve requirement ratios for banks fulfilling real credit growth conditions. In September, however, the central bank increased its policy rate by bps to restore the disinflation process and support price stability. The central bank of Mexico cut its policy rate by 50 bps in each month of Q and effected 50 bps cut in August and another 25 bps cut in September.

Bank Indonesia cut its policy rate by 25 bps each in June and July and has maintained a pause since August. Global financial markets went into a tailspin in March that continued up to March 23, when the US Federal Reserve announced extensive measures to support the economy, including removing the upper bound on its asset purchases.

The announcements engendered a recovery in financial markets across the world. Aided by equally extensive and in some cases, co-ordinated monetary policy action by central banks, financing conditions have improved. Among AEs, the US equity market has continued to recover from the slide in March, with intermittent corrections.

In July, equity indices moved higher on prospects of successful development of a vaccine and better than expected corporate performance. Towards the end of July, there was some correction due to resurgence of infections and increasing tensions with China, but the exceptional performance of the prime technology companies helped in overriding the pessimism. It peaked further in early September followed by correction, with shares of technology companies registering a large decrease.

In the other major AEs, even as stock indices have been rising gradually, they are yet to recover year-to-date losses. In the Euro area, despite news on the finalisation of the Next Generation EU fund 3 , the stock market remained flat with differential pace of opening of multiple economies and localised resurgence of infections.

The uptrend in the stock market in the UK was even more gradual, with the country registering the worst economic contraction among major AEs. The stalemate over Brexit negotiations has dampened sentiment on the outlook. Japanese stocks also slowly recovered from the slide in the earlier part of the year in Q2, and thereafter the index has almost stalled. In the second half of September, stock markets in the Euro area and UK corrected further with rising possibility of a second wave of infections and need for lockdown.

Risk-on sentiments following massive monetary accommodation by central banks led to resumption of capital flows to EMEs, which have strengthened further in Q3. In September, however, stock markets in EMEs have also corrected on global cues.

The flight to cash phase in bond yields ended on March 23, Thereafter, yields softened in AEs and remained range-bound in Q2, in part due to the unprecedented policy accommodation and continuing safe haven demand.

There has been some hardening of yields in Q3 in the AEs, particularly in August, mainly on account of mixed news on the economic front Chart V.

With renewed virus concerns, safe haven demand for US Treasuries has resurged. Yields in EMEs, on the other hand, have witnessed considerable softening since Q after the rout in the earlier part of the year. This has been on the back of large monetary loosening, including bond purchase programmes undertaken by a few EME central banks. China has, on the contrary, seen a rise in yields after the pause following the 20 bps cut in policy rate in April.

The modest degree of industrialisation to date suggests substantial potential for manufacturing and construction activity to support future growth. A second distinguishing feature is India's relatively low rate of urbanisation Graph 9. The proportion of the population living in urban areas has increased steadily over recent decades, but the majority still live in rural areas.

The urbanisation rate is likely to continue its upward trajectory, reflecting better economic opportunities in cities, as well as government plans to encourage the development of urban centres. The transfer of people from relatively low-productivity occupations in agriculture to higher-productivity jobs in manufacturing and services represents an additional source of potential growth in the coming decades. A third characteristic that is likely to support future growth is India's relatively young population Graph The majority of the population is of working age 15—64 years old , and the United Nations projects the working-age population to continue to grow until around By comparison, China's working-age population has already peaked.

The projected rise in the working-age population implies a gradual decline in the dependency ratio the share of the population that are children or past retirement age , which should lower the fiscal burden of health, education and aged-care expenses. More generally, it suggests that the economy's aggregate output will continue to expand even if the level of labour productivity is unchanged.

In fact, labour productivity has recorded robust growth in recent years Graph At least in part, it is likely that this represents the outcome of a series of reforms since the early s that sought to deregulate industrial licensing, privatise state-owned firms and open markets to domestic and international competition Ahluwalia ; Panagariya This suggests that the future trajectory of productivity growth will partly depend on the success or failure of the current round of government-led reform initiatives.

Since forming government in , the Modi administration has introduced a series of policies and reforms that seek to boost investment, strengthen productivity and support the processes of industrialisation and urbanisation. The administration also introduced a GST in July to raise productivity and increase fiscal revenue by reducing tax evasion. The GST replaced central and state taxes that resulted in duplicate taxation and reduced efficiency in numerous ways — for example, many such taxes were levied at state borders, increasing the cost of logistics and interstate transportation.

The removal of these distortions should help to support growth in coming years. Despite fears that the GST would harm near-term economic prospects, its introduction caused only modest short-term disruption to economic activity and, aside from a spike in the monthly CPI in July , inflation has not been noticeably affected.

In addition, the government has introduced a number of financial reforms to address the problem of bad debts in the banking system, which is widely thought to have dampened the supply of credit and weighed on growth in private investment. In May , the government passed the Insolvency and Bankruptcy Code that consolidated existing legislation into a single code, clarifying the law and imposing a time limit of days for the resolution of cases Ministry of Finance A recapitalisation plan announced in October seeks to replenish the capital of public sector banks which account for more than 70 per cent of the banking system.

Collectively, these initiatives may make it easier for bad debts to be recovered, relieve pressure on banks with high levels of stressed loans, and thereby improve incentives for banks to extend credit to the corporate sector.

In other areas, the government's reform agenda has faced roadblocks. For example, reforms to make it easier for land to be acquired for investment purposes have prompted legal challenges, forcing the central government to leave the burden of land reform to be assumed by state governments. The program is designed to reform the government's welfare programs by allowing subsidy payments, pensions and unemployment benefits to be credited directly to individuals' bank accounts.

This is intended to reduce tax fraud and increase financial inclusion. Although parliament has passed the legislation, its legality has been challenged on privacy grounds in the Supreme Court.

The government has made a number of interventions to cut red tape — for example, reducing the discretion of federal labour inspectors, rationalising the numerous overlapping labour regulations that employers were required to comply with, and simplifying environmental approval procedures for investment.

Although the reform agenda has experienced setbacks and delays, it has probably contributed to stronger public investment and a strengthening of business confidence.

The recovery in Indian imports in recent years has been mirrored in bilateral trade flows between India and Australia, which raises the question of whether this trend will continue. In the future, policies to accelerate urbanisation and industrialisation, if successful, are likely to boost India's demand for raw materials used in the steelmaking process — iron ore and coking coal — including from Australia. Rising per capita incomes can also be expected to support demand for imported services such as tourism and education, which Australia already exports to India.

Australia's bilateral trade with India has grown significantly over the past two decades. This partly reflects ongoing trade reform in India, which has increased the openness of its economy. India is the fourth largest destination for Australian exports, accounting for more than 5 per cent of total goods and services exports by value in Coal exports have been the largest category of Australian exports to India over the past two decades, accounting for 46 per cent of total goods and services exports Table 1.

After peaking in , exports to India declined sharply, reflecting the stagnation of Indian coal demand and a slowdown in education exports Graph However, exports have recovered in the past three years, reflecting a broad-based recovery across goods and services, spurred by the recovery in Indian domestic demand.

Australian imports from India are relatively small; India is Australia's twelfth largest import source. The largest import categories are refined petroleum, travel mainly tourism and business services. Despite strong growth in recent decades, considerable potential exists for trade between Australia and India to expand further.

Since , Australia and India have periodically convened negotiations to conclude a Comprehensive Economic Cooperation Agreement to reduce barriers to trade in goods and services. While there have been no new bilateral free trade negotiations since September , both countries have been engaged in the Regional Comprehensive Economic Partnership negotiations, a proposal for an ASEAN-centred regional free trade area.

India's demand for resource commodities, in particular, is likely to rise as industrialisation and urbanisation continue over the next few decades. The Indian Government has forecast that domestic steel production will increase to million tonnes by , more than triple its current production Ministry of Steel The projected growth in Indian steel output is likely to support demand for iron ore and coking coal.

India's coking coal reserves are small and tend to be of relatively low quality due to their high ash content Department of Industry and Science This has resulted in India importing the bulk of its coking coal requirements, of which 80 per cent are already sourced from Australia.

Although the Indian Government has prioritised research and development seeking to reduce the use of coking coal in the steelmaking process Ministry of Steel , Australian coking coal exports to India are likely to continue to grow strongly given the expected growth in steel production. With regard to iron ore, India is already largely self-sufficient and possesses large high-quality iron ore reserves Indian Bureau of Mines Projections by Australia's Department of Industry, Innovation and Science suggest that India may not be able to increase production at a sufficient rate to meet forthcoming demand arising from steel production DOIIS , p However, the Indian Government has recently eased mining bans and export taxes that were in place between and USGS If these spur a revival in domestic production, they may reduce the potential for Australian exports to be required to meet India's demand for iron ore.

Any further expansion of Australia's resource trade with India will take time. One reason is that India's pattern of urbanisation to date has been quite different from Australia's largest trading partner, China.

Notably, the proportion of dwellings made in India using steel-reinforced concrete is much smaller than in China, reflecting the large proportion of the population still living in rural areas D'Arcy and Veroude For coal, another reason is that the Indian Government has a policy goal of self-sufficiency in coal production Goyal Coal currently accounts for 44 per cent of primary energy demand and this share has risen over time as households have transitioned from the use of traditional biomass wood, straw, charcoal and dung IEA In keeping with India's carbon dioxide emission reduction commitments, the government's Draft National Electricity Plan projects a strong increase in energy derived from renewable sources Ministry of Power However, the Draft National Energy Policy projects that thermal coal will remain the dominant source of energy, at 48—58 per cent of primary energy consumption by , and that it will be supplied almost entirely by India itself by that date NITI Aiyog Fourth film in the franchise, the Matrix returns two decades after it galvanized the sci-fi space globally, with a Meta resurrection story.

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Watch: Tourist enthralls with his flute skills at Ahilyabai Ghat, Varanasi. Sircilla weaver Nalla Vijay weaves sarees that can fit into a matchbox. Survey shows how Tamil Nadu is missing wood for trees. Vicky-Katrina's intimate Lohri celebration. Etimes Photos. Critic Rating 4. The Matrix: Resurrections Fourth film in the franchise, the Matrix returns two decades after it galvanized the sci-fi space globally, with a Meta resurrection story. Critic Rating 3.