Inflation data, trading activity of foreign investors and global trends would dictate sentiment in the stock market this week, according to analysts.
The government on Tuesday appointed three external members -- Ram Singh, Saugata Bhattacharya and Nagesh Kumar -- to the RBI's rate-setting Monetary Policy Committee for four years. The central government has reconstituted the Monetary Policy Committee (MPC) of RBI, the finance ministry said in a statement. Ram Singh is the director of the Delhi School of Economics, Saugata Bhattacharya is an economist, and Nagesh Kumar is the director and Chief Executive, Institute for Studies in Industrial Development, New Delhi.
The rupee plunged 26 paise to an all-time low of 90.75 against the US dollar in intra-day trade on Monday, weighed down by uncertainty over an India-US trade deal and persistent foreign fund outflows.
India is growing fast, but to keep growing strong, the government must make more things at home, create jobs, and spend money wisely, suggests Rajiv Memani, regional managing partner, Africa-India Region, EY.
The transmission of the February and April rate cuts is now complete, validating the central bank's monetary stance and contributing to a revival in credit growth, said Reserve Bank of India (RBI) Governor Sanjay Malhotra on Friday. "We now have preliminary figures for June credit rates, and we find that for new loans, the rates are lower by at least 50 basis points (bps)... within two months of our 50-bp cut, we are in June, and the whole of the monetary policy transmission has happened.
Finance Minister Arun Jaitley on Saturday said that retail inflation is expected to remain close to 5 per cent
The Indian government has expressed its disagreement with the IMF staff's 'baseline' assumption that the 50 per cent US tariffs on its goods exports 'would remain in place indefinitely', based on which the staff pegged the country's GDP growth at 6.6 per cent this year, and pared its 2026-27 projection by 20 basis points to 6.2 per cent.
With the setting of MPC, the interest rate setting powers would move from RBI Governor to the panel.
The government had amended the RBI Act through Finance Act 2016.
A three-year validity of an inflation target is, perhaps, more reasonable and practicable.
Will seek to bring inflation to the mid-point: Rajan
Moody's on Thursday said the new 'inflation targeting' mechanism is a "credit positive" move.
The panel was set up to suggest ways to reform India's monetary policy.
A host of factors including the reform measures taken by the government and decline in global oil and commodity prices have led to lower inflation, the Finance Ministry said on Wednesday.
After Raghuram Rajan leaves, the world for the succeeding RBI governors will be distinctly different.
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.
The Survey is authored by Chief Economic Advisor V Anantha Nageswaran and his team.
RBI's latest rate cut will bring down home, car loan's EMI.
In the current fiscal so far, retail inflation stabilised around 5 per cent, while wholesale price-based inflation averaged around 2.9 per cent during April-December.
Shigeru Ishiba is expected to prioritise strengthening Japan's military capabilities and fostering deeper international partnerships, particularly with India, with whom Japan shares significant strategic interests, explains Dr Rajaram Panda.
The first task before him is to get used to the idea of working with the Monetary Policy Committee
Starting August, various festivals are celebrated in different parts of the country leading to higher sales of commodities ranging from sweets, fruits and food items
The recent agreement between the RBI and the Centre marks a significant step forward toward financial inclusion.
Inflation targeting framework is now enshrined as a formal agreement by the government and the RBI; thus, it may seem that we are flogging a dead horse, says Soumya Kanti Ghosh.
Amendments to RBI Act likely soon
According to D&B, food price levels might witness a rebound as foodgrain production is estimated to have declined during 2014-15.
Drop in oil prices and the government's reform agenda has helped India to be out of the Fragile Five group
The government seemed unhappy with Raghuram Rajan's interest rate policy.
Soon after RBI announcing a much- awaited rate cut, Chief Economic Advisor Arvind Subramanian on Wednesday said that the global rating agencies should look at upgrading their stance on India's credit outlook. "Now we have a 50 basis points rate cut (in two tranches within two months) and I think that is good for the economy and all rate cuts benefits... If the outlook is looking good, the rating agencies should draw their lessons from that om improving the outlook," Subramanian told reporters. After presentation of Union Budget 2015-16 last week, global and domestic agencies had ruled out any immediate upgrade in India's sovereign ratings and had red-flagged the country's delayed fiscal consolidation roadmap and had also warned against any slippages from the "ambitious" disinvestment plan proposed in Budget. Subramanian said that the rate cut is consistent with the government's views in the last week's Economic Survey and thereafter in the Union Budget for the outlook on inflation and for the outlook on overall economy. "It (rate cut) shows that RBI and government are on the same page in terms of how we view the economy. It also means that Budget can be seen as conducive to non-inflationary growth," he added. On monetary policy framework agreement, Subramanian said that both Finance Ministry and RBI have shared concern about inflation. Recently, the Finance Ministry and the Reserve Bank agreed to 'inflation rate targeting' under which the apex bank will aim to lower retail inflation to below 6 per cent by January 2016.
The first major aspect is that of the veto power to the governor.
The Reserve Bank on Thursday said it will come out with a framework allowing borrowers to switch to fixed interest rate from floating interest rate, a move that would provide relief to borrowers of home, auto and other loans reeling under the impact of high interest rate. Unveiling the bi-monthly monetary policy, Reserve Bank Governor Shaktikanta Das said under the framework, to be put in place shortly, the lenders will have to clearly communicate with the borrowers about tenor and EMI. "The supervisory reviews undertaken by the Reserve Bank and the feedback and references from members of public have revealed several instances of unreasonable elongation of tenor of floating rate loans by lenders without proper consent and communication to the borrowers," he said.
M V Subramanian says there is an imperative need for collective responsibility to tackle inflation, prices and availability of essential commodities, and not rely on inflation targeting alone.
Nitin Desai suggests some concrete measures to revive investment and boost growth.
India's economy is not like Western ones, and thus needs restrained fiscal policy even during a recession, says Ajay Shah.
CPI inflation will remain below the target of 6 per cent set for January 2016.
The principal challenge for Rajan's successor is to work with the Bank Board Bureau and the finance ministry to complete these processes of banking reform.
A healthy growth in India's services segments has helped the country's total exports and imports of goods and services to cross the $800 billion mark during the first half of 2023, despite a slowdown in global demand, think tank GTRI said in a report on Monday. According to the analysis of the Global Trade Research Initiative (GTRI), exports of goods and services rose by 1.5 per cent to $385.4 billion during January-June this year, as against $379.5 billion in January-June 2022. Imports, however, dipped by 5.9 per cent to $415.5 billion during the six months of this year, as against $441.7 billion in January-June 2022.
This Budget plans for an increase to 10.3% of GDP from 9.9%.
Pragmatism and flexibility is a virtue. An untethered and short-term approach to policymaking is a flaw, argues Mihir S Sharma.
'The Reserve Bank's independence has remained a work in progress, an enduring challenge that the nation has been grappling with on an ongoing basis,' says RBI Deputy Governor Dr Viral Acharya.
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