The Reserve Bank of India said on Tuesday it would accord highest priority to contain inflation within 5 to 5.5 per cent, while keeping its projection for economic growth during 2006-07 unchanged at 7.5 to 8 per cent.
There is a narrow chance that the central bank may cut rates in the future, according to a poll of 15 economists and treasurers.
With the stock markets scaling new heights, Finance Minister P Chidambaram on Friday sounded a note of caution and asked investors to guard against excessive exuberance.
Reversal in the declining economic growth trajectory is clearly the need of the hour and all steps should be taken to bring about this change.
The Indian equity market is likely to remain under pressure and rangebound over the next few months. This comes as global central banks, led by the US Federal Reserve look at a possibility of hiking rates aggressively to tame inflation. Back home, the Reserve Bank of India, too, remains data dependent in its endeavour to keep inflation in check and pursue an aggressive monetary policy stance.
S&P is the only of the three major credit agencies with a 'negative' outlook on India.
However, WPI inflation remained in double digit for the third consecutive month in July, mainly due to a low base of last year. WPI inflation was (-) 0.25 per cent, in July 2020. "The high rate of inflation in July 2021 is primarily due to low base effect and rise in prices of crude petroleum and natural gas; mineral oils; manufactured products like basic metals; food products; textiles; chemicals and chemical products etc as compared the corresponding month of the previous year," the commerce and industry ministry said in a statement.
Among the Sensex firms, Bajaj Finance emerged as the biggest gainer by climbing 2.95 per cent. Tata Motors, Bajaj Finserv, IndusInd Bank, Sun Pharma, Mahindra & Mahindra, State Bank of India, Larsen & Toubro, HDFC, HDFC Bank, Maruti, Reliance Industries and Bharti Airtel were the other major winners. HCL Technologies, Axis Bank, ICICI Bank, Tech Mahindra and Titan were among the laggards.
These are the highlights of RBI Governor Shaktikanta Das's statement and resolution of the Monetary Policy Committee (MPC):
Defuses worries on global currency war.
Indian rupee is likely to test 76-76.50 levels as a relatively strong greenback, boiling crude prices and COVID headwinds deepen the depreciation bias for the domestic currency, according to experts. One of the significantly-hit Asian currency in recent months amid uncertain economic times, rupee is expected to see a consolidation in the vicinity of the current level before being pulled towards the depreciation bias. While the equity market has been surging with occasional blips, the rupee has mostly been weak against the US dollar in recent months.
RBI has asked banks to 'allow self-certification; accept a certified copy of the document by mail/post' for account opening.
Fed is still concerned about weak export growth.
The statement indicated that RBI might further increase policy rates to tame inflation, which was still at an uncomfortably high level.
In a bid to check fraud, the Reserve Bank on Friday decided to permit all banks to introduce card-less cash withdrawal through ATMs.
Snapping the two-month easing trend, WPI inflation rose in August and remained in double-digit for the fifth consecutive month. In July 2021, WPI inflation stood at 11.16 per cent. In August 2020, WPI inflation was at 0.41 per cent. "The high rate of inflation in August 2021 is primarily due to rise in prices of non-food articles, mineral oils; crude petroleum and natural gas; manufactured products like basic metals; food products; textiles; chemicals and chemical products etc as compared the corresponding month of the previous year," the commerce and industry ministry said in a statement.
The Reserve Bank of India, in its Second Bi-Monthly Monetary Policy Statement for 2014-15, kept the key interest rate unchanged at 8 per cent.
The repo rate could be reduced by 50 bps in the current year.
The decisive election victory for the Narendra Modi-led National Democratic Alliance has created a conducive environment for policy actions and should help in economic recovery, Reserve Bank of India Governor Raghuram Rajan said on Tuesday.
The Union government could target a fiscal deficit of 5.8-6 per cent of nominal GDP for 2023-24, and it should continue its capital expenditure push and look to simplify the personal income tax regime, economists recommended Finance Minister Nirmala Sitharaman and her team during their pre-Budget interaction on Monday. Starting last week, Sitharaman had eight pre-Budget consultations this time. More than 110 invitees representing seven stakeholder groups participated in these meetings, the finance ministry said in a statement. The stakeholder groups included representatives and experts from agriculture and agro-processing industry; industry, infrastructure & climate change; financial sector and capital markets; services and trade; social sector; trade unions and labour organisations; and economists.
The task force will look at emerging markets, technology, regulatory and monetary policies, loss of trust in financial services, and financial inclusion.
Rationalisation of income tax slabs, infrastructure status for digital services and incentives to hydrogen storage as well as fuel cell development were some of the suggestions made by various stakeholders at the pre-Budget consultation meeting convened by Finance Minister Nirmala Sitharaman. The customary pre-Budget consultation meetings were held with the finance minister virtually between December 15 and December 22, as per the finance ministry statement. More than 120 invitees representing seven stakeholder groups participated in eight meetings, scheduled during this period, it said.
India says it gives equal treatment to foreign companies on tax matters, not special consideration.
'Pump prices of petrol and diesel have reached historical highs. An unwinding of taxes on petroleum products by both the Centre and the states could ease the cost-push pressures,' the Monetary Policy Committee (MPC) has said.
He will be the eighth Deputy Governor to be made Governor at RBI
Bankers and the markets on Monday read signals that the Reserve Bank of India was likely to continue its tight money policy in Governor YV Reddy's statement that India is vulnerable to oil and foodgrain price shocks.
Asserting that retail inflation excluding food and fuel is still at an elevated level, the Reserve Bank of India on Tuesday said it would endeavour to curb price increases.
"He (RBI governor Duvvuri Subbarao) has explained the position. I think the governor's statement is very balanced, very appropriate as far as I could understand," Reddy said.
The RBI must first deal with the adverse turn of events in the CPI.
The Reserve Bank has told the International Monetary Fund (IMF) that the objective of frequent interventions in the forex market is to curb excessive volatility, dismissing the Fund's rationale for reclassifying India's exchange rate regime. The IMF, following the Article IV consultation with the Indian authorities, reclassified the status of the exchange rate regime to "stabilised arrangement" from "floating" for period between December 2022 to October 2023. India's Executive Director at IMF K V Subramanian and Senior Advisors Sanjay Kumar Hansda and Anand Singh questioned the selection period adopted by the Fund for analysis and also reclassification of the country's exchange rate regime.
Given the pressure from India Inc and the banking fraternity, it is surmised that the portfolio rejig will take place before April.
The Reserve Bank may be hitting the end of its tolerance for high inflation and will most likely hike interest rates in the first half of 2022, analysts said on Friday. The central bank will also start rolling back its accommodative policies which have led to easy liquidity conditions, they said. The view from analysts came even as inflation cooled down to 5.6 per cent for July, after two months of breaching the upper end of the RBI's tolerance band of 6 per cent.
State Bank of India does not levy any charge for non-maintenance of a minimum balance in basic savings account.
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.
Inflation in food articles during May stood at 1.13 per cent, as against 2.55 per cent in April.
The S&P BSE Midcap and the S&P BSE Smallcap indices added 0.5% and 0.7%, respectively
Improved credit profile may make you eligible to transfer your existing home loan to another lender at a much lower rate.
Inflation in food articles during June stood at 2.04 per cent, as against 1.13 per cent in May.
India Inc on Tuesday expressed disappointment over the Reserve Bank increasing the key rate by 0.25 per cent and hoped that banks would refrain from hiking lending rates as such a move will scuttle economic recovery.
As it stands, there does not seem to be a threat to prices.
