In a move that sent shockwaves through the market, the Reserve Bank of India (RBI) raised the policy repo rate by 40 basis points to 4.4 percent on May 4.

The Indian central bank raising the rate is not a surprise—many economists expected it to do so at its June meeting. But the outside-the-meeting-calendar nature of it has certainly grabbed attention.

The RBI rate hike is also the latest in a series of monetary policy tightening actions by central banks around the world in recent days.

On May 3, the Central Bank of Colombia increased its benchmark interest rate by a massive 100 basis points to 6 percent. The same day, the Reserve Bank of Australia undertook the first rate hike in a decade, raising the cash rate target by 25 basis points to 0.35 percent.

Last week, Sweden's Riksbank increased its repo rate by 25 basis points to 0.25 percent, its first rate hike since the coronavirus pandemic began. Hungary's Magyar Nemzeti Bank raised the central bank base rate by 100 basis points to 5.4 percent.

Other central banks to raise their policy rate in the last couple of weeks include those of Botswana, Paraguay, and Kazakhstan.

While high inflation due to rising energy prices, among other factors, has forced the hand of central banks, they have also acted in anticipation of similar moves by Big Daddy the US Federal Reserve.

The US central bank's Federal Open Market Committee began its two-day meeting on May 3. The committee's decision is due later on May 4, where it is widely expected to increase the federal funds rate target range.

Also read: Closing Bell: Sensex tanks 1,307 pts, Nifty below 16,700 as RBI stuns with a rate hike

According to the CME Group's FedWatch Tool, there is a 97.9 percent probability the Fed will raise the federal funds rate target range by 50 basis points on May 4 to 0.75-1 percent. And the tightening of financial conditions in the US—which itself is facing the highest inflation in several decades—is sending ripples across the world.

"The prospect of an accelerated increase to US interest rates and the impact on international prices of Russia's invasion of Ukraine could lead to additional inflationary pressures," the Central Bank of Colombia said on May 3. Hungary's central bank said expectations of a Federal Reserve rate hike was driving risk appetite.

Also read: Central bank blindsides nation to derail high inflation expectations, says price rise to remain high in near term

The Fed factor 

As far as India is concerned, RBI governor Shaktikanta Das' statement and the Monetary Policy Committee's (MPC) resolution may not have namechecked the Federal Reserve but there was certainly a reference to it.

The MPC said in its resolution that "volatility spillovers from monetary policy normalisation in advanced economies" was a risk to domestic economic activity.

Das was more forthright. "Further, the normalisation of monetary policy in major advanced economies is now expected to gain pace significantly—both in terms of rate increases and unwinding of quantitative easing as well as the rollout of quantitative tightening. These developments would have ominous implications for emerging economies, including India," the governor warned.

In mid-to-late 2013, Indian monetary policy was actually driven by the Fed's actions. First came the taper tantrum that began nine years ago this month. Then came a series of rate actions to cauterise the wound caused by the massive capital outflows from India. And in what was an explicit nod to the Indian central bank's focus on what its US counterpart was doing, former RBI governor Raghuram Rajan postponed his first interest rate decision by two days to have "enough time to consider all major developments in the required detail".

The Indian economy may now be in a far stronger position than it was in 2013 to counter foreign policy spillovers but one cannot deny US monetary policy continues to play a role in shaping some of our, and others', moves.

India’s external sector has remained resilient amidst formidable global headwinds, RBI Governor Shaktikanta Das said on May 4, adding that the country’s merchandise exports remained strong in April 2022 and services exports reached a new high in March 2022.

According to Das, potential market opportunities have opened up due to geopolitical conditions and the recent trade agreements. Further, he believes that strong revenue guidance by major information technology (IT) companies also bodes well for the overall external sector outlook in 2022-23.

Also Read: Markets tumble as RBI stuns with 40bps rate hike, 50bps rise in CRR

The worsening of terms of trade, driven by higher commodity prices could have implications for the current account deficit in 2022-23, but it is expected to be comfortably financed, Das said

“Net foreign direct investment flows have remained robust, despite some recent moderation. Long term flows such as external commercial borrowings also remain stable. India’s foreign exchange reserves are sizeable with net forward assets providing a strong back-up. The external debt to GDP ratio remains low at 20 percent,” he added.

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The S&P Global India Manufacturing Purchasing Managers' Index (PMI) rose in April, coming in at 54.7, up from 54.0 in March.

A reading above 50 indicates expansion in activity, while a sub-50 print is a sign of contraction.

According to IHS Markit, the  compiler of the PMI, Indian manufacturing activity in April saw a marked increase in new orders and production, with international sales growing "solidly" after having contracted for the first time in nine months in March.

"Factories continued to scale up production at an above-trend pace, with the ongoing increases in sales and input purchasing suggesting that growth will be sustained in the near-term," noted Pollyanna De Lima, economics associate director at S&P Global.

IHS Markit completed its merger with S&P Global on Febraury 28, leading to the renaming of the PMI for India as well as some other countries.

Manufacturers continued to stock inputs, with April seeing the largest increase since November.

The improvement in activity levels did not do much for employment in the manufacturing sector, with most firms saying their workforce levels were unchanged in April because of little capacity pressures. However, on the whole, there was a "mild increase" in employment last month.

On the price front, concerns remained. Manufacturers experienced higher costs for chemicals, electronic components, energy, metals, plastics, and textiles compared to March. Higher transportation fees and the war between Russia and Ukraine were cited as the primary reasons for input cost inflation rising to a five-month high in April.

Consumers felt the price rise too, with manufactuers passing on some of the increased cost burden. This resulted in selling price inflation hitting a one-year high.

"This escalation of price pressures could dampen demand as firms continue to share additional cost burdens with their clients," De Lima added.

The rise in consumer prices will not come as a surprise, with inflation based on the Consumer Price Index (CPI) surging to a 17-month high of 6.95 percent in March, data released last month showed.  Economists expect CPI inflation crossed 7 percent in April, putting the Reserve Bank of India's Monetary Policy Committee deeper into a corner.

The rate-setting panel is increasingly expected to start raising the policy repo rate in June to cut down inflation pressures and avoid failing to meet its mandate.

The committee is deemed to have failed to meet its mandate if average CPI inflation is outside the 2-6 percent band for three consecutive quarters.

Inflation averaged 6.3 percent in January-March. The central bank's latest forecast pegs average CPI inflation at 6.3 percent in April-June and 5.8 percent in July-September.

The Digital Communications Commission (DCC), the highest decision-making body of the Department of Telecommunications, on Friday accepted Telecom Regulatory Authority of India's (TRAI) recommendations on the base prices of 5G airwaves, according to a report in the Economic Times.

While deciding that the spectrum should be auctioned for a period of 20 years, the inter-ministerial panel also decided against alloting spectrum directly to corporate bodies for private 5G networks - as recommended by TRAI - suggesting instead that they join hands with licensed telcos, thereby accepting a key demand of operators. Telcos have been pushing for an auction of the spectrum but while Bharti Airtel has suggested it should be bundled with 5G spectrum, Reliance Jio wants it to go up for auction independently.

The TRAI proposal had come under fire from telcos, who said it would kill the business case for 5G spectrum as it would dent revenue from enterprises.

The Minister of Communications Ashwini Vaishnaw said on Thursday that the DoT is working to resolve industry concerns on 5G.

The auctions , which will pave the way for 5G services in the country, are likely to be held in early June and services are expected to be rolled out by August-September this year

Also Read:- 84 years at same company: Meet 100-year-old world record holder

A 100-year-old man from Brazil has earned a Guinness World Record for the longest career at the same company. Walter Orthmann has been working at a textile company for 84 years.

Orthmann was born in Brusque, a town with a large German population. As a teenager, he began working at Industrias Renaux S.A, which is now known as ReneauxView.

"Back in 1938, kids were expected to work to help support the family," Orthmann was quoted as saying by Guinness. "As the oldest son of five, my mother took me to find a job at the age of 14."

He started off as a shipping assistant and was soon promoted to a sales position. Eventually, he became a sales manager.

In his 50s, Orthmann began travelling across the country, discovering new places and fostering professional relationships that became friendly.

In his career spanning decades, Orthmann has witnessed many changes -- at home and abroad. That, he said, taught him that it was important to be adaptable.

Orthamann turned 100 on April 19 this year and his coworkers and family threw a big party to celebrate his life.

Reflecting on his long stint at the same place, Orthmann said when people do what they enjoy, they don't see the time go by.

His advice for young professionals is to work for good establishments, in areas where they feel motivated.

Orthmann said that he does not bother himself with too much planning or worrying about the future.

 "All I care about is that tomorrow will be another day in which I will wake up, get up, exercise and go to work; you need to get busy with the present, not the past or the future," he told Guinness. "Here and now is what counts. So, let’s go to work!"

It will take nearly 15 years for the Indian economy to make up for the losses it has incurred during the coronavirus pandemic, according to the Reserve Bank of India's (RBI) report on currency and finance for FY22.

"Taking the actual growth rate of -6.6 percent for 2020-21, 8.9 percent for 2021-22 and assuming growth rate of 7.2 percent for 2022-23, and 7.5 percent beyond that, India is expected to overcome COVID-19 losses in 2034-35," the report, released on April 29, said.

The report, whose theme this year is 'Revive and Reconstruct' in the context of nurturing a durable post-pandemic recovery and raising trend growth in the medium-term, does not reflect the views of the central bank itself but of the contributors, who are part of the RBI's Department of Economic and Policy Research.

The assumption of a growth rate of 7.5 percent from next year onwards is rather optimistic. The International Monetary Fund's latest World Economic Outlook report pegged India's growth rate for FY24 at 6.9 percent. Even the RBI's own Monetary Policy Report, released on April 8, said structural models indicated GDP growth in FY24 might be 6.3 percent.

Several independent economists see GDP growth next year, and possibly beyond that, closer to 6 percent. This would mean the losses incurred during the pandemic would take longer to overcome.

In monetary terms, the output losses assumed by the central bank's staff in its estimates are Rs 19.1 lakh crore for FY21, Rs 17.1 lakh crore for FY22 and Rs 16.4 lakh crore for FY23.

India's real GDP in FY22 is estimated to be Rs 147.54 lakh crore.

"The dividends of reforms initiated to counter the pre-COVID slowdown along with additional measures and initiatives during the pandemic will help launch the economy on a sustainable high growth path. The behavioural and technological changes brought about by the pandemic may usher in a new normal which would not necessarily ape the pre-pandemic trends but would be built on a more efficient, equitable, clean, and green foundation," the report added.

In the foreword to the report, Governor Shaktikanta Das said it was not sufficient to just stabilise the economy and return it to its pre-first wave path. The task at hand, according to Das, was to create a "virtuous cycle of greater opportunity" for entrepreneurs, businesses, and the fiscal authority.