India’s Top 500 Companies 2019

INDIA’S TOP 500 COMPANIES 2019 74 Retail inflationary pressures eased in recent months Surge in fuel group inflation led to hike in WPI inflation 0 1 2 3 4 5 6 0 2 4 6 8 10 12 14 16 18 20 % % Fuel WPI - inflation (RHS) Source: RBI Source: Ministry of Commerce In view of upside risks to the inflation caused by surging global crude oil prices and increased government consumption expenditure, the RBI raised policy repo rates twice by 25 bps each to 6.5% during H1 FY19. However, with softening of global oil prices, slowdown in global economic activity and easing of domestic inflationary expectations, the RBI reduced repo rate to 6.25% in February 2019 and further to 6% in April 2019. The RBI also changed the monetary policy stance from calibrated tightening to neutral. Although the RBI has reduced policy repo rate, the full pass through of policy rate cut to bank lending rates hasn’t taken place because of higher interest rates on deposits and moderate growth in deposits. Given the slow growth in saving deposits, banks have to meet their credit requirement by sourcing corporate deposits at a higher interest rate. Growth in bank credit surpassing growth in deposits 0 2 4 6 8 10 12 14 16 18 Apr-2017 May-2017 Jun-2017 Jul-2017 Aug-2017 Sep-2017 Oct-2017 Nov-2017 Dec-2017 Jan-2018 Feb-2018 Mar-2018 Apr-2018 May-2018 Jun-2018 Jul-2018 Aug-2018 Sep-2018 Oct-2018 Nov-2018 Dec-2018 Jan-2019 % deposit credit Source: RBI Dun & Bradstreet