According to the global financial services major, inflation may remain sticky, with a possible El Nino effect on the monsoon likely to push up food prices and geopolitical uncertainties seen pumping up global commodity rates.
In the second policy review under Governor Shaktikanta Das, the six-member Monetary Policy Committee voted 4:2 in favour of the rate cut.
The wholesale price index based inflation in June declined to 7.25 per cent from 7.55 per cent in the previous month.
Government's effective supply-side measures and commendable commitment to fiscal consolidation will have a salutary impact on inflation, says the RBI report.
UN body Food and Agriculture Organisation (FAO) has revised upwards India's rice production to 100 million tonnes (MT) in the 2012-13 crop year on the back of revival of rains in August and September.
Inflation data for June has not brought any cheer to the markets. From this data, the possibility of a rate cut is negligible. Deficient monsoons and higher food prices would make any rate action difficult.
'Both IIP and CPI inflation numbers are showing a huge disconnect from the leading indicators.'
The minister blamed 'fragmented farming, provisions in the Agricultural Produce Marketing (Development & Regulation) Act, lack of cold chain facilities, transportation, proper storage and processing facilities' for the losses.
While a pick-up in summer monsoon rains in recent weeks is expected to cool food inflation, most analysts don't anticipate another rate cut before a new governor is on the job
Softening inflation, Das said would make available more policy space to the central bank to address risks to the growth going forward.
Slowing inflation prompted the RBI to cut the policy repurchase rate last month by 25 basis points to 6.50 percent, the lowest since 2011.
The price rise measured in terms of Wholesale Price Index rose for the second straight month, to 5.79 per cent in July, on account of double digit rise in prices of food articles, mainly vegetables, including onion.
Deficiency in rainfall and the resultant decline in food grains and oilseeds output would exert inflationary pressures and need to be cushioned against the possible delay in monsoon, an Assocham study said.
India is gearing up to introduce a six-member monetary policy committee that would vote on interest rates.
We need to invest in the science of monsoons and weather forecasting.
The forecast of deficient monsoon rainfalls scared farmers.
Food inflation is still very much a problem and needs fixing urgently, but the bad monsoon apparently did not make it worse.
The IMD attributed the projection to a weakening of El Nio and the Indian Ocean Dipole turning positive.
El Nino, which refers to warmer-than-average sea surface temperatures in the central and eastern tropical Pacific Ocean, will likely to keep CPI inflation up at 8-10 per cent in the second half of 2014 and will pose a 50-70 basis point risk to this fiscal's growth expectation, the report by financial services major Bank of America Merrill Lynch said.
Twenty teams of the NDRF, comprising about 900 rescue persons, have been deployed in the state.
The CII has suggested a 5-point agenda on the measures that need to be undertaken by central and state governments to stave off the adverse effects of a deficient monsoon. Let's find out what this agenda is. . .
Raj Bhavan sources said the swearing-in ceremony will be held at 11 am on Sunday, a day before the monsoon session of the Maharashtra legislature, the last before assembly polls later this year, begins.
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Heavy rains lashing Mumbai since Sunday have thrown rail, air and road traffic out of gear, with several trains and flights being cancelled. With IMD forecast of heavy rains for Tuesday, the authorities declared a holiday in the city and adjoining regions, asking people to avoid stepping out of their houses.
The decision, taken by the Cabinet Committee on Economic Affairs headed by Prime Minister Narendra Modi, comes less than a year before next general election.
There are few concerns in India's growth story.
This was the near-unanimous replies of 10 market participants.
Data compiled by National Collateral Management Services (NCML, a non-government body) shows a 6.3 per cent rise to 109 million tonnes (mt). The Union ministry of agriculture's first advance estimate was 100.5 mt, as compared to 102 mt in last year's fourth advance estimate.
Indian economy is expected to expand at 8.5-9 per cent over 10-15 year time frame once the structural issues hampering growth are addressed by the government.
The disaster management department said that the state government has urged the Indian Air Force to send a helicopter for air-dropping of food packets and other relief material in marooned areas.
Chief Economic Adviser K V Subramanian on Monday said the overall impact of the second wave of COVID-19 on the country's economy is not likely to be large but cautioned about an uncertainty surrounding the pandemic going ahead. He further said that given the circumstances due to the pandemic, it is difficult to forecast if the country would achieve a double digit growth in the current fiscal. The Economic Survey 2020-21 released in January this year had projected GDP growth of 11 per cent during the current financial year ending March 2022.
'I hope the trend is sustainable and that economic activity accelerates going forward.'
The aid will directly benefit 25,000 people from some of the worst hit areas of the state, adding a humanitarian expert from the European Civil Protection and Humanitarian Operations has also been deployed to assess the situation in the state.
The food ministry is likely to fix the selling price of wheat and rice lower than the current market price.
For July-September, it pegged CPI-based retail inflation at 4.2 per cent which it saw firming up to 4.8 per cent in the second half of the current fiscal.
Nearly all the 43 economists surveyed over the past week expect the RBI to leave its key repo rate on hold at 8 per cent.
The health and family welfare ministry spent 70 per cent of its allocation till October. The ministry may need additional funds for the vaccination drive which is expected to be kicked off from January.
In a twist to people's understanding of Uttarakhand's monsoon mayhem, Dwarka peeth Shankaracharya Swami Shree Swaroopananda Saraswati has blamed the sex-food-fun oriented consumerism propagated by tour operators in the land otherwise known as "dev bhoomi" for the plight of thousands of pilgrims.
The Maharashtra government on Tuesday withdrew its lockdown relaxation norms for Mumbai and Pune regions, both coronavirus hotspots, and revised its last week's guidelines prohibiting door-to-door delivery of newspapers and magazines in the state.
New Delhi says existing food stocks will be sufficient to contain any food price shock.
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