Economy Tracker: IN RBI b/s notes issued and CIC (June 16); RBI MPC June 6-7 meeting minutes; kharif sowing - Kotak

Key events/data releases during the week

- RBI balance sheet, reserve money and related updates (as of June 16) (Details in slides 4, 5, and 6)

* Notes issued: Rs15.0 tn (November 4: Rs17.7 tn)

* Currency in circulation: Rs15.3 tn (Rs17.9 tn)

- The June 6-7 policy meeting minutes were overall mildly dovish with almost all members acknowledging the recent fall in inflation and its core components and fading immediate upside risks. However, MPC members (except Dr Dholakia) seemed concerned on inflation risks owing to farm loan waiver-led fiscal slippages. The two significantly contrasting inflation views were evident in the June minutes as well. Dr Patra argued that in a forward looking inflation targeting regime, amid limited clarity on decoupled impact of transitory and structural factors on inflation deceleration, hasty policy cuts can be costly in the medium term. On the other hand, Dr Dholakia suggested that amid the present benign conditions, the costs of waiting for further opportune moment for accommodation could be severe. He strongly argued for a 50 bps of repo rate cut.

- As of June 23, 2017, the total Kharif acreage is 9.6% higher than the same period last year. Rice sowing is 4.6% higher at 1.7 mn hectares. Oilseed acreage is 11.1% higher at 1.1 mn hectares and pulses acreage at 0.6 mn hectares is 33.7% lower than last year's. Coarse cereals' acreage is 11.1% higher at 1.8 mn hectares. Sugarcane and cotton acreages are at 4.8 mn hectares (4.5 mn hectares last year) and 2.5 mn hectares (1.9 mn hectares last year) respectively.

Source : Equity Bulls

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