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.
India builds up record FX after Fed hints rate hike in future.
In refusing to accept its failure, the government has sowed the seeds of further damage: by keeping India short of cash; reducing the headroom for responses to seasonal spikes in cash demand; and increasing the chances that groups will panic at temporary cash shortages, says Mihir Sharma.
After opting for status quo in policy rates, Reserve Bank Governor Raghuram Rajan on Tuesday said any more cut will depend on further transmission of previous rate cuts by banks, softening in inflation and progress of monsoon.
Ajay Banga was on Wednesday appointed the next president of the World Bank, becoming the first-ever Indian-American to head the global financial institution which said it looks forward to working with him at a time when it's tackling the toughest development challenges facing developing countries. "The executive directors of the World Bank today selected Ajay Banga as president of the World Bank for a five-year term beginning June 2, 2023," the bank said in a press statement. In February, President Joe Biden announced that the US would be nominating Banga, 63, to lead the World Bank because he is "well equipped" to lead the global institution at "this critical moment in history."
The cutback on export credit refinance facility is another step towards a shift away from sector-specific liquidity allocations.
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.
RBI said inflation in the second half of the current fiscal is projected at 2.7-3.2%. It retained its GDP forecast for the current fiscal at 7.4%
The Sensex has hit its lowest level since August 29, 2016 whereas the Nifty hit its lowest level since Sep 12, 2016
RBI seen cutting repo rate 25 bps on Sept 29, says a poll
If providing a stimulus to growth is the objective now, that would be best served by moving rates as quickly as possible to the bottom.
The International Monetary Fund (IMF) warned on Tuesday that India's general government debt (comprising both central and state government debt) could exceed 100 per cent of gross domestic product (GDP) in the medium term. It also cautioned that long-term debt sustainability risks are high due to the significant investment required to meet India's climate change mitigation targets. The Indian government, however, disagreed, arguing that risks from sovereign debt are extremely limited as it is predominantly denominated in domestic currency.
A series of interest rate cuts in India has failed to lead to cheaper commercial lending, leaving Asia's third largest economy to grow at only 6 per cent this year, the central bank said on Tuesday.
The S&P BSE Sensex shed 119 points to close at 27,977 and the Nifty50 dropped 45 points to finish at 8,591.
The rupee has dropped by 60 paise or 0.89 per cent in the last three trading days.
Here are the key decisions announced by the Reserve Bank of India on Thursday.
SBI is the third state-run lender to lower the lending rates after Indian Overseas Bank Tuesday and Bank of Maharashtra which also lowered their loan prices by 5 bps on loan tenors of one year and above, effective April 10.
The RBI Governor brought down retail inflation to 3.8% in July.
How do we get back to higher trend growth? The heart of the problem lies in private corporate investment, recommends Ajay Shah.
Raghuram Rajan rejected the argument that inflation has come down largely because of "good luck" stemming from low oil prices.
The repo rate has been unchanged since January, when the RBI increased it by a quarter percentage point.
Patel, 55, who took over as the 24th Governor of the central bank on September 5, 2016, had the shortest tenure since 1992.
In the RBI's monetary policy statement review, Governor Raghuram Rajan said banks could extend timelines for large stalled projects by bringing in new 'promoters', or owners.
IMF attributes the slower growth rate to supply-side bottlenecks.
According to the Third Advance Estimates for 2007-08, the total foodgrains production is slated to reach an all-time high at 227.3 million tonnes, recording an increase of 4.6 per cent over the previous year (217.3 million tonnes). The production during 2007-08 would exceed the target set earlier (221.5 million tonnes) by 5.8 million tonnes. Notwithstanding the moderation, the growth performance was in tune with the high average real GDP growth of 8.7 per cent.
North Block and Mint Road seem likely to now stick to the earlier convention of the RBI governor coming to Delhi and being the only MPC member meeting the finance minister and senior bureaucrats on pre-policy meetings
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.
Asian emerging market stock prices did see a bounce post Fed-talk.
Echoing Prime Minister Narendra Modi's views that improving the health of financial markets alone cannot fuel growth, G20 business leaders on Friday said vigorous efforts should be made to go beyond fiscal and monetary policy to kickstart world economy and create jobs.
The Fed made clear that the rate hike was a tentative beginning to a "gradual" tightening cycle
RBI projects GDP growth in FY16 at 7.8 per cent, 30 bps higher than FY15. However, this comes with a downward bias.
The RBI's projections for consumer inflation over the rest of the year indicate some acceleration, with the rate reaching eight per cent in its baseline scenario.
To spur foreign investment in the corporate bond market, the Finance Ministry has proposed reduction in withholding tax for FIIs to 5 per cent, from 20 per cent at present.
The World Bank has appointed Indermit Gill, an Indian national, chief economist and senior vice-president for development economics at the multilateral development bank. "Indermit Gill brings to this role a combination of leadership, invaluable expertise and practical experience working with country governments on macroeconomic imbalances, growth, poverty, institutions, conflict, and climate change," World Bank President David Malpass said in a statement. His appointment will be effective September 1, 2022.
"We did not abuse RBI governors," says Chidambaram.
With the Budget-making exercise in full swing, RBI Governor Shaktikanta Das on Friday said Budget 2021-22 is expected to be prudent and growth oriented. Das before donning the hat of RBI Governor was a career bureaucrat and was directly involved in crafting of about 10 Budgets for the country including one in the aftermath of global financial meltdown in different capacities at the finance ministry. In view of unprecedented pandemic and its impact on the economy, he said the government has maintained fiscal prudence in the response to deal with the crisis.
The speed at which he led the central bank in different areas -- ranging from internal reorganisation to inflation fighting, stabilising the currency, taking on rogue corporations, cleaning up bank balance sheets, and opening the sector -- makes one believe that Rajan knew he had only three years to do his job. A fascinating excerpt from Tamal Bandyopadhyay's MUST-READ Roller Coaster: An Affair with Banking.
While the collapse of a large financial intermediary can wreak havoc on the system because of the interconnectivity, a large business conglomerate too can play spoilsport if the banks have too much exposure to the entity, explains Tamal Bandyopadhyay.
With the industrial production dragging the overall growth down, it said the government must also focus on the manufacturing sector by reducing the "infrastructure deficit".
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