1. Forex reserves
The Russia-Ukraine war has given India cause for much worry. India’s heavy reliance on crude oil prices, which are still trading above $100 per barrel, has caused severe risk to the rupee and current account deficit. India’s foreign exchange reserves, which had hit $642 billion in September, are acting as a buffer against the external risks, leading to a significant decline. In the week ended 13 May, forex reserves had fallen to $593 billion.
The pressure on the Indian currency and, consequently, forex reserves, is likely to continue because of the continuing heavy outflow of foreign investors along with the inflationary pressures of the war in Europe. The forex reserves had already recorded the 10th weekly drop in the previous week and the decline likely continued in the week ended 20 May, data for which is due on Friday, as the rupee continues to hover near a record-low.
2. Indonesia’s palm oil exports
Indonesia, the world’s largest producer of palm oil, has decided to lift the ban on the export of the commodity from Monday. The move is likely to bring down the prices of edible oils around the world. More importantly, it comes as a big relief for India as the country is already facing sharp inflationary pressures from edible oils and is also heavily reliant on Indonesian palm oil to meet domestic needs. In April 2021 and February 2022, Malaysia was the biggest supplier of palm oil, but Indonesia still accounted for 40–45% of total palm oil imports.
As palm oil is used as raw material in several household goods such as soaps and biscuits, a shortage would have intensified the cost of manufacturing these goods. The short-lived ban, which began on 28 April, led to a sharp surge in prices. However, the lifting of the ban is now unlikely to ease overall inflation as other factors may keep prices elevated.
3. Early monsoon
India may get some respite from the heatwave that has prevailed over the past few weeks. The southwest monsoon could reach Kerala’s shores on Friday, which is four days earlier than the normal onset date of 1 June, according to the India Meteorological Department.
The monsoon entered the Andaman Sea last week, with the favourable weather conditions being attributed to cyclone Asani. The four-month seasonal rains are crucial for India’s agrarian economy. It accounts for 70% of India’s annual rainfall and irrigates more than half of India’s cropland. With the country reeling from the impact of high inflation, particularly elevated food prices, improved sowing may also lead to higher yields. This, in turn, could soften runaway inflation levels.
4. IPL final
The Indian Premier League's (IPL) 15th edition enters its business end this week, with the final match to be played in Ahmedabad on Sunday. The first qualifier is between table-toppers Gujarat Titans (GT) and Rajasthan Royals on Tuesday, and the winner will seal its spot in the final. This will be followed by an “eliminator" between Lucknow Super Giants (LSG) and Royal Challengers Bangalore on Wednesday. The loser in the first qualifier will get another shot at the final when it plays the winner of the eliminator on Friday. This will then lead us into the final.This is the first season when none of the three most successful teams in IPL history have reached the last four, whereas both the new franchises—LSG and GT—have made it in their first attempt. Jos Buttler and Yuzvendra Chahal of Rajasthan Royals are the top contenders for the orange and purple caps so far, given to the leading run-scorer and wicket-taker.
5. In other news
The Uttar Pradesh government is set to present its first full budget since re-election on Thursday. Both the governor’s address and the budget would be tabled digitally through the National e-Vidhan Application (NeVA) centre, an application developed by the Centre for paperless functioning of legislatures. The budget will be presented against the backdrop of Uttar Pradesh emerging from the covid-19 pandemic that hit the state hard. The state’s finance minister Suresh Khanna said that the budget will focus on “infrastructure creation, jobs and youth".
Elsewhere, Prime Minister Narendra Modi will participate in the third Quad leaders’ summit in Tokyo on Tuesday. Modi is also expected to hold bilateral talks with US President Joe Biden. The Quad is an informal strategic alliance formed in 2007 between India, Japan, the US, and Australia to ensure better cooperation among the four Indo-Pacific nations and is commonly viewed as a response to China’s rising power.
