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India’s economy produced a mixed set of signals during the week, with record foreign exchange reserves and stronger flows of funds to the commercial sector providing some comfort even as industrial growth moderated and the monsoon remained uneven.
Forex reserves scale new peak
India’s foreign exchange reserves jumped $12.4 billion to an all-time high of $729.3 billion in the week ended August 21. The increase was aided by inflows through the RBI’s concessional foreign-currency swap window, strengthening the economy’s external buffer.
Monsoon recovery only partly eases farm risks
The Reserve Bank of India (RBI), in its August Bulletin, said improved rainfall in July had brought kharif sowing closer to normal and partly eased agricultural risks. However, cumulative monsoon rainfall remained 13 per cent below normal between June 1 and August 26, with 14 states and Union Territories recording deficient rainfall.
The uneven distribution of rainfall remains important for crop output, rural demand and food inflation.
Wheat exports resume after record harvest
The government lifted the ban on wheat exports, imposed in 2022, following a record harvest of 120.6 million tonnes. The decision also comes at a time when the Russia-Ukraine war has disrupted global grain supplies, allowing India to re-enter the export market while domestic availability has improved.
Sugar policy turns towards easing supplies
The Centre revised raw sugar import conditions, giving importers two months from filing the Bill of Entry to refine and sell imported sugar. The import quota remains unchanged at 1 million tonnes.
Sugar prices have meanwhile begun easing. Medium-grade sugar prices in Kolhapur fell around 12.59 per cent between August 21 and 25 following import approval and tighter limits on stocks held by bulk consumers.
China urea supplies offer relief
China is expected to supply at least 1.2 million tonnes of urea to India under the latest tender, accounting for at least two-thirds of the bookings. The supplies could strengthen fertiliser availability during the crop season.
US sanctions hit India-based companies
Four India-based companies were sanctioned by the United States for their alleged involvement in importing Iranian petroleum and petrochemical products, widening the impact of Washington’s pressure campaign against Tehran.
Industrial growth loses some momentum
Industrial output grew 6.7 per cent year-on-year in July, moderating from the revised 8.8 per cent expansion recorded in June. Manufacturing output rose 7.3 per cent, indicating continued expansion but at a slower pace.
Commercial-sector funding more than doubles
Flows of financial resources to the commercial sector rose to Rs 10.65 trillion during April-July from Rs 4.48 trillion in the year-ago period. Non-food bank credit was the biggest contributor, suggesting stronger availability of funds for businesses.
ECLGS 5.0 closed after guarantee limit exhausted
The government ended the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 just over three months after its launch after the ₹2.5 trillion guarantee allocation was exhausted. The early closure has left banks dealing with loans that had been sanctioned but were yet to be disbursed.
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