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Tag: Economic

  • Long-awaited 5G spectrum auction expected in April-May 2022: Official

    The long-awaited 5G spectrum auction is expected to be held in May this year if the Telecom Regulatory Authority of India (Trai) submits by March its recommendations on the rules regarding the sale process, according to a senior official of the telecom department.

    Telecom Minister Ashwini Vaishnaw earlier this month said the Trai has informed that it will submit its recommendations for the 5G auction by March and the Department of Telecommunications (DoT) is simultaneously firming up other processes to hold the auction at the earliest.

    “Trai has indicated that they will send it (recommendations) by March. Thereafter, it will take us a month to make a decision around it,” Telecom Secretary K Rajaraman told PTI.

    Earlier, the government has taken time of 60-120 days to start the bidding rounds in the auction after receiving recommendations from Trai on spectrum auction.

    Rajaraman said it will take the DoT two months to start the auction from the day it gets recommendations from the Trai.

    According to the DoT, 5G is expected to deliver download speed 10 times faster than 4G services.

    As per the process, DoT seeks reference from the Trai on spectrum price, method for allocating it, block size of spectrum, payments terms and conditions, among others.

    The Trai holds consultation with the industry and other stakeholders and then submits recommendations to the DoT.

    As per the current practice, the apex decision making body at the DoT, the Digital Communications Commission (formerly the Telecom Commission) takes the decision on Trai recommendations and then approaches the Cabinet for the final approval.

    Rajaraman said that the DoT has already selected MSTC as the auctioneer for the upcoming auction.

    Trai has given participants in 5G spectrum consultation to submit their additional comments by February 15 after which it will review and come up with recommendations.

    Telecom operators have demanded up to 95 per cent cut in the spectrum frequency band price. Both telecom and satellite players are at loggerheads with each other on rules for the 5G spectrum auction.

  • The Monetary Policy Committee (MPC) may go for a hike of up to 0.25 per cent in the reverse repo rate at which the RBI absorbs excess liquidity and leave the repo rate at which it lends, to narrow the policy rate corridor, a British brokerage said on Thursday.

    “Growth concerns amid spread of the Omicron variant and relatively benign inflation out-turns provide the RBI with enough room to maintain its growth-supportive monetary policies,” analysts at Barclays said, ahead of the resolution announcement next week.The RBI will hike the reverse repo rate by 0.20-0.25 per cent, given its liquidity management actions, it said.

    The brokerage joins a growing list of watchers expecting a reverse repo hike.

    Other analysts also blame the surprising hike in the government borrowing announced in the budget for the RBI’s likely call for policy normalisation.

    Barclays said the budget’s focus on capital expenditure is expected to provide a back-loaded fiscal impulse to the economy and does not change the macro backdrop, which includes concerns on inflation.

    On the surging global oil prices, which generally play into domestic inflation through corresponding price hikes of fuels locally, the brokerage said the inflationary pressures are unlikely to rise before the state elections finish by March, hinting of no pass-through.

    Even though the inflation is benign lately, the RBI needs to be vigilant, it said, pointing to its own forecasts suggesting the headline number staying in the upper end of the 2-6 per cent band and also the crude prices moving higher.

    It said till now, the liquidity signals from the RBI have been mixed, which have included shelving of the bond purchasing programme GSAP, an increase in both the quantum and cut-offs for voluntary reverse repo rate auctions and some bond sales in the secondary market last month.

    The policy guidance will be dovish when compared to RBI’s global peers who have been guiding or announcing rates hikes as inflations become into a concern, it said, adding that inflation in India should trend lower through 2022.

  • Economists feel an uptick in investment and demand in FY23 will broad-base growth

    The economic recovery is likely to be broad-based and more durable in the next financial year as Covid-battered micro, small and medium enterprises (MSMEs), informal industries and contact-intensive services see a pick-up in capital investments and healthier balance sheets due to revival in demand, say economists. The resurgent Omicron variant, persisting shortages and bottlenecks, and worldwide divergence in policy stances due to inflationary pressures remain a concern, they say.

    “While we are watchful of the economic impact of global spread of Omicron, we are cautiously optimistic economic recovery in India will be more durable and broad-based in the coming year,” said Aditi Nayar, chief economist, Icra NSE 0.37 %.

    The International Monetary Fund (IMF) projected an 8.5% growth for India in FY23 in its October review last year. Overall economic growth is likely to be impressive in the current financial year, statistically boosted by the low base of 7.3% contraction in FY21. The Reserve Bank of India has forecast a 9.5% real GDP growth in the current fiscal, which should be a 1.6% rise over pre-Covid FY20.

    “We also expect broad-basing of growth, with rising contributions from the services sector. Government support has put investments on a stronger footing vis-a-vis private consumption, which is currently fragile,” said Dharmakirti Joshi, chief economist, Crisil.

    MULTIPLE DRIVERS
    Next fiscal could see both investments and consumption drive growth, with exports providing a helping hand. Rising consumption will push capacity utilisation above the crucial threshold of 75% by the end of 2022, which should trigger a broadbased pickup in private sector investment activity, said Nayar. Private consumption — the biggest GDP component — rose by over 8.6% in the second quarter of the fiscal but is yet to cross pre-Covid levels. If the economic recovery continues, private consumption is expected to rebound, too.

    An expected solid expansion in taxes will allow the government to prioritise growth-enhancing capital spending, which is also expected to crowd in private investment. The new tech ecosystem, asset monetisation and expansion of productionlinked scheme are among key drivers that could offset the potential demand slowdown.

    AND HEADWINDS
    The rapid advance of Omicron in the metros remains a concern as it could disrupt the economic recovery. However, economists are optimistic that its impact would not be so severe amid indications that the variant may spread faster but is not likely to be as damaging as earlier ones.

    “Omicron as a wildcard entry has tilted risks to outlook downwards.

    Experience tells us that successive waves, even if they overwhelm the health infrastructure, are less damaging to the economy,” said Joshi. Other risks that could weigh on growth include actions of the US Federal Reserve and other central banks, and domestic inflation dynamics. A rapid rise in US interest rates could disrupt financial markets.

    “Rising input prices (WPI) is bound to find its reflection on retail prices (CPI). This, along with higher deficit, will increase interest. However, exports is a ray of hope, said Devendra Pant, chief economist, India Ratings.

    Economists ET spoke to expect RBI to raise the repo rate by 50 basis points starting next financial year. Another concern is high crude and commodities prices, which could cause a faster-than-expected rise in interest rates if inflation accelerates.