Prime Minister Narendra Modi will on Friday launch two schemes of the Reserve Bank of India (RBI) that may go a long way in changing how the household sector invests, and complains if anything goes wrong with their savings. These schemes - retail direct and an integrated ombudsman - will be launched by the Prime Minister virtually, in the presence of Finance Minister Nirmala Sitharaman. With the introduction of retail direct, a common man can directly take a position in government securities (G-Sec), considered to be the safest asset class a sovereign can offer.
Some measures announced in Indradhanush -- a 7-point Modi plan to revamp State-owned banks but not completed -- may be taken up again.
Investors' wealth soared by Rs 10.58 lakh crore in three days of the market rally, where the BSE benchmark jumped over 2 per cent, and hit an all-time high on Monday. Extending its winning momentum to the third day running, the 30-share BSE Sensex jumped 363.20 points or 0.49 per cent to settle at 74,014.55. During the day, it zoomed 603.27 points or 0.81 per cent to hit its record high of 74,254.62.
Years before the Supreme Court struck down as 'unconstitutional' an opaque political funding tool that allowed individuals and companies to donate money to political parties anonymously and without any limits, the then finance minister Arun Jaitley -- the prime mover of electoral bonds -- had termed them legitimate and transparent.
The talk of governance reforms at public-sector banks seems to remain on paper, as a majority of them continue to be working with just a handful board members. Half of the board seat at these banks have been vacant. Ten of the 12 public-sector banks, even large ones like Punjab National Bank, Canara Bank and Union Bank of India - all except State Bank of India (SBI) and Bank of Baroda - don't even have a chairman. In 2014, while splitting the post of chairman & managing director (CMD), the government had decided to appoint non-executive chairmen at these banks. SBI, which has an executive chairman and four managing directors, was an exception.
In her fourth tranche of the economic package, she said commercial mining will be done on revenue sharing mechanism instead of the regime of fixed rupee/tonne.
The Centre's proposal to call for governance reform in the RBI could, however, take a back seat, a source privy to the development said.
As deputy governor, Patel headed the RBI panel to draft the monetary policy report, which became the basis of the ongoing reforms at the apex bank
The use of RBI capital to strengthen public sector banks will have many positive implications for the economy -- and a few manageable downsides, points out R Jagannathan.
'His (Das) approach to work seems that of working as a team with ease in communication.'
RBI says haste in easing norms for banks harmful to economy.
'To simply let the rupee depreciate to any level according to market forces will not be in the country's interests.'
Reserve Bank Governor Shaktikanta Das on Wednesday said the country is at the doorstep of economic revival on the back of accommodative monetary and fiscal policies being pursued by the central bank and the government.
There hasn't been any dramatic moment in the first act (the Budget) but nobody would complain. It's par for the course as long as the figures don't change in the main Budget, which will be presented after general elections.
India needs a second green revolution along with the next generation of reforms with a view to make agriculture more climate-resistant and environmentally sustainable, said an RBI article on farm sector challenges. Observing that Indian agriculture has exhibited remarkable resilience during the COVID-19 period, the article said "new emerging challenges warrant a second green revolution along with next-generation reforms". Despite the success in terms of production that has ensured food security in the country, food inflation and its volatility remain a challenge, which requires supply-side interventions such as higher public investment, storage infrastructure and promotion of food processing, said the article titled 'Indian Agriculture: Achievements and Challenges'.
Asked when the economy will revive, Das said it is difficult to make an estimate as there are many things which are still playing out.
The Budget, to be presented on February 1, is likely to be less worried about fiscal deficit and will be focused more on nursing the fragile growth, according to a Wall Street brokerage report. Bank of America Securities India expects the budget to peg "fiscal deficit at a high 5 per cent of GDP for FY22 and 7.2 per cent for FY21, as it is likely to step up capex, recap public sector banks, push asset sales to break government monopolies, offer sops for real estate, tax cuts for lower income groups and creation of a bad bank". Its house economists expect these spends to be funded by debt and partly by imposing a cess on high income groups and also by some non-fiscal measures like tapping the central bank's revaluation reserves and bank recapitalisation and infra bonds.
While RBI is likely to cut repo rate by 25 basis points on Wednesday, the government is also expected to push reform initiatives like increasing FDI limit in insurance sector in the Budget session, it added.
This is because the bond market has factored in the Rs 4.88-trillion gross borrowing for April-September 2020.
Lauding the government and RBI for saving the day for India with conservative banking norms, ICICI Bank chairman KV Kamath said on Monday any further reforms in the sector should wait as global banks are in 'disarray'. Expressing his views on RBI deferring the liberalisation of foreign banks, the ICICI Bank chairman said: "I think it is entirely appropriate that they have said they will review it at appropriate time."
Moody's has cautioned the government against targeting double-digit gross domestic production expansion saying any growth beyond 7 per cent without reforms will fuel inflation that will result in 'more painful' future adjustments.
The central bank dashed hopes of any steep interest rate reduction.
Y H Malegam, 80, will head the panel that will look into non-performing bank assets and their relation to the Rs 114-bn PNB scam.
She said I treated her like a bachchi. At another moment, she said I had gone to various people and 'bitched' about her. She also threatened to bring the entire matter to the PM's notice. A revealing excerpt from Subhash Chandra Garg's We Also Make Policy: An Insider's Account of How the Finance Ministry Functions.
India can become a $6.7 trillion economy by 2031, from $3.4 trillion currently, if the country clocks an average growth of 6.7 per cent for 7 years, an S&P Global report said on Thursday. India had clocked a 7.2 per cent GDP growth in 2022-23 fiscal. But a global slowdown and lagged effect of a policy rate hike by RBI could slow down growth to 6 per cent in the current fiscal, S&P Global said in a report titled 'Look Forward: India's Money'.
Governments that did not respect the central bank's independence would sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue the day they undermined the regulatory institution, Deputy Governor Viral Acharya warned.
Managing Brexit, inflation and banking reforms, along with the political environment, will be tough.
No government in the past initiated the process of policy making for its next tenure even before going in for elections. Once the Model Code of Conduct is enforced by the Election Commission, should the government of the day refrain from taking an active interest in policy making for the next five years and let that be the function of the new government?, asks A K Bhattacharya.
Tension between the government, specially the finance ministry, and RBI is as old as the central bank itself.
India's real GDP growth will decline marginally to 6.3 per cent in 2024 from the 6.4 per cent estimated for 2023, an American brokerage firm said on Monday. The next calendar year will be of two halves, wherein the government spending before the upcoming General Elections will be the key driver for growth, while after the elections, it will be the re-acceleration in investment growth, especially from the private sector, Goldman Sachs said in a report. From a fiscal year perspective, the brokerage said it expects growth to accelerate to 6.5 per cent for FY25 from the 6.2 per cent it has projected for the ongoing FY24, it added.
'We get to know secrets such as some of India's top-rated firms do not always make payments when due and many State-owned, listed, enterprises that borrow in bond markets default regularly.' 'Without naming the bank, he says that ever-greening of poor loans by a part of India's shadow banking lay at the doorstep of India's banking, notably 'one private bank'.' Viral Acharya's Quest for Restoring Financial Stability in India won't be music to many ears, observes Tamal Bandyopadhyay.
'Investment creates capacity and reduces inflation. Income, employment, and savings rise.'
'One way of doing this could be offering credit guarantee to the banks, say 10 per cent, for fresh loans given to micro, small and medium enterprises,' observes Tamal Bandyopadhyay.
The year 2014-15 could well go as one of long-pending financial sector reforms, expected to have a lasting impact.
Observing that the economic recovery was not yet fully entrenched, the RBI Governor said recovery is likely to be gradual.
Bankers seem to be pleased with the government for keeping its promise of not interfering in operational matters, but are apprehensive about the intense scrutiny of their functioning.
The land acquisition bill is a catalyst to investment and passing the bill will improve India's business environment.
India's political infighting is denting business confidence.
Indian economy, dubbed the fastest growing major economy in the world, is faced with the single most important pressure point of job creation, says former RBI Governor Raghuram G Ranjan as he makes a strong case for improvement of human capital through skill development. Talking about the book 'Breaking the mould: Reimagining India's economic future', written jointly by him and Rohit Lamba, assistant professor of economics at Pennsylvania State University, Rajan said one of the greatest strength of India is its human capital of 1.4 billion and the question is "how do you make it strong?" The nation needs to create jobs at every level going along the path of development, said Rajan, presently Katherine Dusak Miller Distinguished Service Professor of Finance at Chicago Booth, USA.
A Reserve Bank panel has suggested a benchmark floating interest rate, especially or home loans, to bring greater transparency in the pricing of credit.
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