This Budget plans for an increase to 10.3% of GDP from 9.9%.
As the MPC is mandated to target CPI inflation rate at 4 plus minus 2 per cent, any measurement error in CPI is likely to have grave consequences for monetary policy.
It is thanks to the policy of liberalisation conceived by Manmohan Singh and enforced by P V Narasimha that the Indian economy has now become the world's 5th largest economy by nominal GDP, asserts Dr Sudhir Bisht.
Taking advantage of the RBI's different accounting year, the Centre had started demanding an interim dividend till the time the latter's final balance sheet is prepared (usually in August). To address this anomaly, an expert committee led by former RBI governor Bimal Jalan had recommended aligning the RBI's financial year with that of the government.
RBI also retained its GDP growth forecast at 7.6 per cent
The Reserve Bank of India (RBI) on Wednesday announced to increase the policy repo rate by 50 basis points to 4.9 per cent, the second hike in five weeks aimed at quelling the inflation. The MPC vote was unanimous and has decided to keep stance withdrawal from accommodative, RBI Governor Shaktikanta Das said in a press conference on Wednesday. The decision was taken during a three-day meeting of the RBI's Monetary Policy Committee (MPC) to review the interest rates in the country. The MPC voted unanimously to increase the policy repo rate by 50 bps to 4.90 per cent," Das said.
he reason behind the cut in policy rate seems to be a slowing economy
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.
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.
'Unless the government comes up with the rulebook, the technical requirements will not be clear to us.' 'Going by the Act, non-technical provisions can be complied with within six months.' 'But we need up to 24 months for provisions like parental consent.'
India Inc on Friday said it is looking forward to a repo rate cut in future as cost of funds has to come down in coming times, and expects continuation of accommodative policy stance by the Reserve Bank of India (RBI). The RBI decided to leave the benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance, as the economy faces the brunt of the second COVID-19 wave. Sanjay Aggarwal, president of PHD Chamber of Commerce and Industry, said the RBI has maintained an accommodative stance as long as necessary to revive and sustain growth on a durable basis and to mitigate impact of COVID-19, apart from an aim to keep inflation within the target.
Similarities between NDA and UPA on some key policy issues are now becoming too stark to be ignored, says A K Bhattacharya.
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 repo or short term lending rate remains unchanged at 6.75 per cent and the reverse repo rate at 7.75 per cent.
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.
Inflation trajectory, domestically as also globally, is what will shape the economy, and therefore the market, over the next couple of quarters.'
'There are deeper, underlying, forces at work and we need institutional arrangements to guard against them.'
The Rupee is 3.7 per cent undervalued on trade related basis.
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.
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.
'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.
Also says PSU banks divestment to be considered after improvement in governance
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.
'Perhaps GST was too complex a system for the Indian economy at its present stage of development,' argues T N Ninan.
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.
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 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.
The IMF expressed its opposition to any move that compromises the independence of central banks anywhere in the world.
India's banks rely on overnight borrowings to fund longer-term lending.
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.
'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.'
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.
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.
'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.'
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.
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
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