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5 things to look forward to in 2017
It’s time to say goodbye to another year. But the idea is to move forward. It’s even more important to be forward-looking as investors.
Here’s a look at the 5 key events to look forward to in the coming new year:
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Rate cuts in India
The Reserve Bank of India (RBI) has not cut rates in its December 2016 meeting. Further rate cuts depend on key factors like the actual impact of demonetization, the rise in crude oil prices, changes in inflation as well as many other global factors. The RBI is also looking at banks to pass on previous interest rate cuts. The market always cheers interest rate cuts. This is because it helps reduce costs for the industry and stimulates consumers to spend more.
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Rate hikes in the US:
While India looks at rate cuts, the US may witness increases in interest rates. The US central bank, Federal Reserve, recently announced a rate hike of 0.25 percentage points. It also suggested that there could be three more rate hikes in 2017. This is because the US economy is growing at faster rates. This is leading to a rise in prices. The US central bank’s focus has, thus, shifted at controlling inflation.
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India to slow down:
But just a little. Nothing too alarming. Most experts and even the RBI foresees the Indian economy to grow at a slower pace in FY2017. This is mainly because of the demonetization of the 500- and 1,000-rupee notes. Apart from that, consumption by the people and investment by public and private companies has been increasing slowly. The RBI expects the economy to grow at 7.1% in the current fiscal year ending March 2017, instead of the 7.6% forecasted earlier. Kotak Institutional Equities, however, expects the growth to slow to 6.4%.
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Reformist Budget:
The government has announced multiple reforms in the last two-three years. The latest was the demonetization of higher-value notes. Considering all this, the Union Budget could be one of the most important events this year. It could lay the roadmap for more reform measures. The government has already cancelled the Railway Budget and reportedly re-scheduled the Union Budget to February 1st.
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GST roll out:
It’s touted to be the biggest reform in India in the last few decades. However, it has taken a lot of time. While the Constitutional Bill for GST was passed in the Parliament, it’s roll-out could take longer. It was supposed to be implemented by April 2017. However, many experts and media reports suggest that it could take more time. However, the government has a deadline of September 2017 to roll out GST. This could cause big-ticket changes in the way the economy functions and grows.
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35%
The year may change, but one thing is expected to continue—the impact of demonetization. The government took currency notes worth Rs 14 lakh crore out of circulation. However, it plans to introduce new notes worth only Rs 9 lakh crore. This 35% less than the money taken out of circulation. However, even this could take time to get into circulation. In fact, it could take the government up to May 2017 to introduce all of the Rs 9 lakh crore, as per an Economic Times report.
