A staunch defender of demonetisation, it would be interesting to see how he handles the government's increasing demand for more cash from the RBI, and letting some weak banks get out of prompt corrective action.
We are much better placed than in 2013 with our overall fundamentals much stronger - higher foreign exchange reserves, a more favourable growth-inflation mix and an institutional framework for targeting inflation, says B Prasanna.
Inflation trajectory, domestically as also globally, is what will shape the economy, and therefore the market, over the next couple of quarters.'
he reason behind the cut in policy rate seems to be a slowing economy
Similarities between NDA and UPA on some key policy issues are now becoming too stark to be ignored, says A K Bhattacharya.
The repo or short term lending rate remains unchanged at 6.75 per cent and the reverse repo rate at 7.75 per cent.
The rupee appreciated further on Thursday, adding 106 paise to 66.01 against the dollar, after steps taken by new Reserve Bank of India Governor Raghuram Rajan to attract US currency inflows boosted market sentiment.
The steep decline in commodity prices has reversed.
The global ratings agency, however, cautioned that high debt burden remains a constraint on the country's credit profile.
Gold, which lost its sheen to some extent in the second half of 2021, is likely to regain the glitter in the New Year and cross the Rs 55,000-per-10-grams level amid pandemic woes, inflation worries and stronger US dollar. After a stellar run up in 2020 when the yellow metal touched a record high of Rs 56,200 on the MCX in August, the prices are near Rs 48,000 per 10 grams now. This is roughly 14 per cent lower from the all-time highs and 4 per cent lesser compared to January 2021 levels.
'There are deeper, underlying, forces at work and we need institutional arrangements to guard against them.'
Analysts say RBI will cut rates because the liquidity crunch that began this time last year is still hurting the economy and also with an eye on the August industrial production numbers, which showed a contraction by 1.1 per cent -- the steepest in seven long years.
The Rupee is 3.7 per cent undervalued on trade related basis.
'Government of India has the right to give directions to RBI'.
"The poor will not suffer disproportionately due to bouts of sharp inflation, and the middle class will not see its savings eroded," Raghuram Rajan said.
All public sector banks have moved to such a regime voluntarily, while private banks are yet to. The state-run banks have introduced repo-linked products for floating-rate home and auto loans, but the RBI said loans to micro, small and medium enterprises (MSMEs) should also be linked to an external benchmark.
The increasing involvement of Big Tech in the financial system could give rise to concentration risk and there are potential spillovers, which call for closer attention, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Tuesday. "...enormous amounts of consumer data is being generated and leveraged upon by a few entities (the so-called Big Tech) by virtue of their huge customer base. "Such developments raise concerns on concentration risk and potential spillovers as their level of engagement with the financial system strengthens in the years to come," Das said at the Global Fintech Fest 2022.
'Perhaps GST was too complex a system for the Indian economy at its present stage of development,' argues T N Ninan.
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.
Also says PSU banks divestment to be considered after improvement in governance
'The Digital Rupee will be equal to the Indian rupee in value and backed by the full faith and credit of the RBI/Indian government.'
The friction with the political class is not only about interest rates and monetary policy. While the government often spoke freely about its discomfiture, the RBI had to be careful even in its response to the government as any loose statement would affect the markets.
'Generic skills are in abundance, but technological advancements have left staple skills redundant.' 'It is why employers are now looking for alternate sources of hiring -- deploying gig workers, looking at Tier 2 and Tier 3 cities for relevant talent.'
A V Rajwade wonders if the Modi sarkar is pursuing price stability at the cost of potential social instability in both rural and urban India.
The IMF expressed its opposition to any move that compromises the independence of central banks anywhere in the world.
Amid imminent phasing out of the fiscal stimulus by US Federal Reserve, Prime Minister Manmohan Singh on Wednesday called for an "orderly exit" from unconventional monetary policies being pursued by the developed world for the last few years to avoid damaging growth prospects of the developing world.
Inflation targeting has worked well and the government must stay with it, and the framework is going to work well in the period ahead also, former RBI Governor D Subbarao said on Thursday. He also said low inflation contributes to sustainable growth. Addressing the 'Times Network India Economic Conclave' virtually, Subbarao said the government's proposal to privatise some public sector units is not akin to selling family silver but it is a route for putting India on a sustainable growth path.
As if wanting to be an antidote to the coronavirus pandemic, the Indian stock market adorned carnival robes in 2021 with a tsunami of liquidity unleashed by global central banks coupled with supportive domestic policies and the world's largest vaccination drive sparking off a world-beating rally on Dalal Street, despite bouts of uneasiness over fizzy valuations. While the wider economy shuttled between recovery and relapse, dictated by multiple mutations of the virus, equity market benchmarks appeared headed in just one direction -- skywards. The dizzying upward journey has added a whopping Rs 72 lakh crore during 2021 to investors' wealth, measured as the cumulative value of all listed shares in the country, taking it to nearly Rs 260 lakh crore.
India's banks rely on overnight borrowings to fund longer-term lending.
In a business friendly move, the Reserve Bank of India on Friday said that Real Time Gross Settlement System (RTGS), used for large value transactions, will be made available round-the-clock from December. In December 2019, the National Electronic Funds Transfer (NEFT) system was made available on a 24x7x365 basis. Currently, RTGS is available for customers from 7.00 am to 6.00 pm on all working days of a week, except second and fourth Saturdays of every month.
He said the short term macroeconomic priorities of the RBI continue to focus on bringing down inflation towards the government-set target of 4 per cent
The move may release funds locked in government securities and add to liquidity. With inflation expectations lowered, this should not impact bond sentiment in the short run
Stressed MSME borrowers would be eligible for restructuring of debt, if their accounts were classified standard.
The government on Wednesday asked the Reserve Bank to maintain retail inflation at 4 per cent with a margin of 2 per cent on either side for another five-year period ending March 2026. To control the price rise, the government in 2016 gave a mandate to the RBI to keep the retail inflation at 4 per cent with a margin of 2 per cent on either side for a five-year period ending March 31, 2021.
The reform priorities are clear: enhance savings, improve productivity. Just 25 basis points of moving interest rate up or down would not boost investment: Former RBI Governor Y V Reddy.
'RBI and the economy will gain tremendously from Urjit Patel's experience in both private and public sectors'
Chaos in Parliament threw a spanner in the government's efforts to revive the economy and kick-start reforms.
As the reform process is expected to gain further momentum, the Indian rupee will continue to outperform its Asian peers, which are likely to weaken further against the US dollar in 2015, says an HSBC report.
Bharatiya Janata Party leader Subramanian Swamy on Sunday once again attacked Raghuram Rajan on the monetary policy, over a month after Prime Minister Narendra Modi had disapproved of his criticism of the Reserve Bank of India chief.
India's economy grew at 7.6 per cent in 2015-16.
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