India Macro Weekly: Re-shuffle in ministerial portfolios, economy data positive

For the week ended July 9, 2016:

  • A re-shuffle in key ministries was the highlight policy event of the past week. From the economy and business perspective, key portfolio changes were seen in Finance, Textiles, Telecom, Statistics and Programme Implementation, Mines and Steel. New ministers were also inducted, while a few were let go.
  • On the data front, there was good news on three counts. One, house price inflation dropped further to 5.3% on a year on year (yoy) basis for Q4 2015-16, the lowest since the first index data available for 2010-11.
  • Two, tax collection figures showed robust growth in  Q1 2016-17. Increases in indirect tax collections are particularly robust, with an almost 31% growth on account of strong excise collections. This suggests increased business activity, which bodes well for growth.  Direct tax collections were also healthy, though this was more due to a change in rules for direct tax collections than underlying income growth.
  • Third, crop sowing picked up, as rainfall activity recovered to normal/excess levels and storage levels in major reservoirs also improved.
  • Given the ongoing impact of Brexit, INR continues to sharply appreciate against GBP, as compared to muted changes against USD and EUR.

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