WHAT'S NEW. International Developments. The Bank of Canada raised its key interest rate by 25 basis points to 1.25%.

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1 International Developments The Bank of Canada raised its key interest rate by 25 basis points to 1.25%. The Bank of Japan boosted its bond buying plan and reassured markets that monetary policy will remain ultra-loose given meagre inflation. BoJ Governor Haruhiko Kuroda and his deputy Kikuo Iwata stressed the bank will maintain powerful easing with inflation far from its 2% target. FOMC officials expect reductions in corporate and personal taxes to boost consumer and business spending, though they remain unsure of new tax law's impact, as per minutes from their December meeting. China's GDP climbed 6.8% year-on-year in the fourth quarter, the same pace of growth as seen in the third quarter. Infull year 2017, China's economy expanded at a faster pace of 6.90% after rising 6.70% in China's foreign exchange reserves, the largest in the world, rose for the 11th straight month to $3.14 trillion at the end of December Eurozone inflation eased to 1.40% in December 2017 from 1.50% in November UK CPI stood at 3.0% year-on-year in December 2017 from 3.10% in November Eurozone current account surplus rose to EUR billion from EUR billion in October. The IMF said China's expansion will slow down to 6.60% and 6.40% in 2018 and 2019, respectively, as against 6.80% in The IMF raised the global growth projections by 20 basis points each to 3.90% for both 2018 and According to the latest UNCTAD Global Investment Trends Monitor, global flows of foreign direct investment (FDI) fell by 16% in 2017 to an estimated $1.52 trillion. 44

2 Indian Economy The Government of India decided to reduce additional borrowing in FY to `20,000 crore through dated Government securities as against previously notified `50,000 crore. Real GDP at constant ( ) prices in the is likely to attain a level of ` lakh crore, as against the Provisional Estimate of GDP for of ` lakh crore, released on May 31, The growth in GDP during is estimated at 6.50% as compared to the growth rate of 7.10% in As per the First Revised Estimates for FY17 and the Second Revised Estimates for FY16, real GDP at constant ( ) prices for the years FY17 and FY16 stands at ` lakh crore and ` lakh crore, respectively, showing growth of 7.10% during FY17 and 8.20% during FY16. India registered a fiscal deficit of `8,844 crore during December 2017 as against deficit of `43,254 crore in December The fiscal deficit in April- December 2017 accounted for % of the budgeted estimates of `5,46,532 crore for India's exports increased 12.36% in December 2017 to $27.03 billion from $24.06 billion in December Imports rose 21.12% to $41.91 billion from $34.60 billion. The overall trade deficit for April-December 2017 is estimated at $70.06 billion as compared to $35.63 billion during April-December The Index of Industrial Production (IIP) grew 8.40% in November 2017 against a growth of 5.10% in November The IIP registered a growth of 3.20% in April-November 2017 as against a growth of 5.50% in April- November The eight core industries with a combined weight of 37.90% in the Index of Industrial Production (IIP) grew 4.0% in December 2017 as against 5.60% in December Cumulative growth for April-December was 4.0%, as against 5.30% growth in April-December Provisional annual inflation rates based on all India general CPI Rural, Urban and Combined for December 2017 on point to point basis are 5.27%, 5.09% and 5.21% (3.83%, 2.90% and 3.41% in December 2016). Inflation rates (final) for Rural, Urban and Combined for November 2017 are 4.79%, 4.90% and 4.88% respectively. 45

3 Indian Economy The annual rate of inflation, based on monthly WPI, stood at 3.58% (provisional) for the month of December 2017 as compared to 3.93% (provisional) for November 2017 and 2.10% during December The year-on-year inflation measured by monthly CPI-IW stood at 3.97% for November 2017 as compared to 3.24% for October 2017 and 2.59% during November India's holding of US Treasury Securities at the end of November 2017 stood at $ billion vis-à-vis $ billion at the end of October Net provisional figures for Direct Tax in April-December FY18 stood at `6.56 lakh crore which is 18.20% higher than the net collections for April- December FY17 and represented 67% of the total Budget Estimates of Direct Taxes for FY18 ( `9.80 lakh crore). Indian mutual funds invested `1.20 lakh crore in equities in 2017, much higher than over `48,000 crore infused in Following the tabling of the Economic Survey, Chief Economic Adviser Arvind Subramanian said that there is less scope for RBI to lower interest rate with growth picking up and inflation hardening. The IMF kept its growth projection for India unchanged at 6.70% for the current fiscal and stated growth will rise steadily to 7.40% in and 7.80% in the year after. India has "enormous growth potential" compared to other emerging economies, the World Bank said, as it projected a growth rate of 6.70% in 2017, 7.30% in 2018 and 7.50% for the next two years. As per Fitch Ratings' 'Medium-Term Growth Potential in Emerging Economies' report India has the highest GDP growth rate of 6.70% per annum over the next five years among the 10 major economies. Attributing the continuing slowdown to the impacts of the demonetisation, GST implementation and weakness in agriculture, Crisil has maintained its FY19 growth estimate at 7.60% on the low base. In its outlook for , India Ratings and Research said that Indian economy is expected to grow 7.1% next fiscal from 6.5% this year. According to HSBC, Indian economy is expected to grow in the next three years (FY18-20) by 6.50%, 7% and 7.60%. 46

4 Reserve Bank of India: (Source: The Central Government nominated Dr. Prasanna Kumar Mohanty and Shri Dilip S. Shanghvi as Directors to the Central Board of the Reserve Bank of India. RBI released an indicative calendar of market borrowing by state government for the quarter January-March The Government of India (GoI) announced the cessation of issue of 8% GoI Savings (Taxable) Bonds, 2003 for subscription with effect from the close of banking business on Tuesday, the January 2, GoI announced the launch of 7.75% Savings (Taxable) Bonds, 2018 commencing from January 10, 2018 to enable resident citizens/huf to invest in a taxable bond, without any monetary ceiling. RBI notified 7.75% Savings (Taxable) Bonds, Amendments. RBI issued Master Direction on foreign investment in India. RBI permitted the overseas branches/subsidiaries of Indian banks to refinance ECBs of highly rated (AAA) corporates as well as Navratna and Maharatna PSUs subject to conditions. RBI notified on submission of financial information to information utilities by Asset Reconstruction Companies (ARCs). RBI released draft directions on hedging of commodity price risk and freight risk in overseas markets. RBI launched Quarterly Order Books, Inventories and Capacity Utilisation Survey: October-December (Round 40). RBI released 'Mint Street Memo' titled Credit disintermediation from banks - Has the corporate bond market come of age? RBI released results of the 80th round of the Industrial Outlook Survey (IOS) conducted in October-December RBI released data on sectoral deployment of bank credit for the month of December RBI released data on India's invisibles for second quarter (July-September) of RBI released data on sectoral deployment of bank credit for December

5 Reserve Bank of India: (Source: RBI released the data on ECB, FCCB and RDB for the month of December RBI released the data on overseas direct investment for the month of December RBI released lending rates of scheduled commercial banks based on data received during December RBI released data on performance of the private corporate sector during the second quarter of CCIL CCIL's USD-INR Segment settled the highest no. of deals 4,63,256 and the highest gross volume of USD billion during January

WHAT'S NEW. International Developments

WHAT'S NEW. International Developments International Developments Bank of Japan Governor Haruhiko Kuroda pledged to forge on with very accommodative monetary policy as he warned that the inflation target remains distant and the current pace