At least a 25 basis points hike can be expected on the October 5 policy
The government is likely to name a successor to Rajan sometime this month
RBI governor is seen succeeding International Monetary Fund (IMF) chief executive officer, Christine Lagarde, next year.
Relations between the Mint Road and North Block have often been frosty, with the former's calls for lowering rates being the biggest point of difference
Market participants must appreciate that staying cautious is a virtue for central bankers and should not expect a sudden reversal in the formal monetary policy stance.
'If the government spends Rs 10 lakh crore this year then you would be looking at a GDP growth of minus 5 per cent.' 'If you do not do this, you will be looking at GDP growth between minus nine and minus 10 per cent.'
Heading to the third year, will Urjit Patel be busy firefighting a currency crisis? Almost no governor of the RBI managed to evade it and Patel perhaps knows it.
On one hand, Operation Greens should help to smoothen volatility in the prices of vegetables, whereas the proposal to enhance and extend minimum support prices to augment farmer incomes, may emerge as an inflation risk.
Will RBI chief have the final say, in the form of a veto
'There are deeper, underlying, forces at work and we need institutional arrangements to guard against them.'
'We get to know secrets such as some of India's top-rated firms do not always make payments when due and many State-owned, listed, enterprises that borrow in bond markets default regularly.' 'Without naming the bank, he says that ever-greening of poor loans by a part of India's shadow banking lay at the doorstep of India's banking, notably 'one private bank'.' Viral Acharya's Quest for Restoring Financial Stability in India won't be music to many ears, observes Tamal Bandyopadhyay.
Achieving inflation target of 4 per cent, recovery after remonetisation and hardening profile of oil prices are some of the risks which the RBI is watching closely, says Gaurav Kapur.
'Overall, domestic demand has moderated significantly. 'The weakening of private consumption, which for long has been the bedrock of aggregate demand, in particular, is a matter of concern,' RBI Governor Shaktikanta Das said in the MPC meetings, in October.
The wider Nifty hit a low of 10,033.35 before finishing at 10,044.10, down 74.15 points or 0.73 per cent.
The main reason was that CPI inflation would likely remain below 4 per cent till July.
'The assumed linear correlation between forced lower yields, higher bank borrowing from the RBI, higher lending, and higher growth involves leaps of faith, each a step on the quicksand of false beliefs,' warns Debashis Basu.
According to Soumya Kanti Ghosh, chief economic advisor of the State Bank of India group, a 50 bps rate cut is a possibility, but 25 bps is more likely.
The central bank had revised its inflation forecast significantly downward in the last policy
The central bank tweaked the retail inflation range to 4.8-4.9 per cent in the first half of 2018-19, and 4.7 per cent in the second half.
HDFC Bank was the top loser in the Sensex pack, falling 2.99 per cent, followed by Adani Ports at 2.87 per cent.
RBI Governor Shaktikanta Das said the central bank saw economic growth slowdown in February, prompting it to cut rates ahead of the curve and wondered why markets were surprised with the decision to pause rate reduction. Noting that there is a need for an "informed and objective discussion" on the country's economy, Das said the RBI would do "whatever is necessary" to address growth slowdown, spikes in inflation as well to ensure good health of banks and non-bank lenders. The apex bank went for five consecutive rate cuts starting in February this year, making it a cumulative reduction of 1.35 per cent.
'Common sense says if one can afford, servicing the loans during this period is a better bet than postponing it by three months,' says Tamal Bandyopadhyay.
Slowdown in industrial production notwithstanding, a marginal increase in inflation raised the clamour for another round of rate cut by the Reserve Bank on April 4 to boost economic activity.
If you are planning for a long-term goal like your child's education in a foreign university, invest about 20% of your portfolio in foreign assets that can provide a hedge against the rupee's depreciation.
'Rate cut should reiterate RBI's commitment in providing confidence to consumers and small business.'
Jaitley said inflation has been under control for long and is likely to remain so on the back of good monsoon and unlikely spike in oil prices.
'The slide in growth has arisen primarily because we have an NBFC crisis on top of a banking crisis,' points out T T Ram Mohan.
Sahil Kapoor of Edelweiss Retail Capital Market Research says that setting up a monetary policy committee should have been the first step. And the central bank could have moved towards a formal inflation targeting mechanism after the processes and data sets are in place.
In the Sensex pack, M&M was the biggest loser, tumbling by 6.66 per cent, followed by TCS dropping 4.14 per cent.
The broader NSE Nifty closed 1.25 points, or 0.01 per cent down at 10,564.05.
After Raghuram Rajan leaves, the world for the succeeding RBI governors will be distinctly different.
The bank remains on high alert to intervene if markets freeze.
"Kharge dissents regularly," the minister said.
Jaitley also hinted that these very economic realities could decide whether the government sticks to a fiscal consolidation roadmap or not.
By no means do economists see the Reserve Bank of India stop at just a 25-bp cut. Some of the economists such as Soumyakanti Ghosh of State Bank of India are of the firm view that rates have room to fall by a total of 75 bps in the current financial year, starting with 25 bps in the August 7 policy.
Arvind Subramanian was appointed CEA in October 2014 and got a year's extension in September 2017
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Deficits could come under more pressure in coming years as states implement their own Pay Commissions.
Retail inflation crossed the RBI's comfort level and rose to 5.21 per cent in December on increase in prices of food items.
Fitch said the full implications of Patel's resignation will only become clearer once there is some indication of the RBI's policy approach under his replacement, Shaktikanta Das
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