oppn parties Growth Versus Inflation: The Tricky Question Before RBI

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  • Allahabad HC said that the UP Police is acting as law unto themselves as they detained a person unlawfully even before his arrest
  • Kolkata witnesses traffic snarls on the first day of the Durga Puja festival as revellers start pnadal-hopping
  • Neha Bora was subsequently released and Dipke is to appear before a magistrate today at noon
  • Delhi Police detained Cockroach Janta Party founder Abhijeet Dipke, Neha Bora of AISA, student leaders and supporters ahead of a rally in Connaught Place demanding Chief Election Commissioner Gyanesh Kumar's resignation. The protest followed the detention and jailing of two CJP leaders earlier in the week over demonstrations at Jantar Mantar
  • The Reserve Bank of India is considering further monetary tightening to counter capital outflows and increase the cost of betting against the rupee, according to bankers and analysts cited by Reuters. The measures follow recent rate increases and steps to drain liquidity as pressure on the currency and inflation concerns persist
  • India directed oil marketing companies to stop diverting sugar-based feedstocks for ethanol production in the 2026–27 supply year, according to a new tender issued on Friday. The companies have invited bids for 11 billion litres of ethanol made from alternatives including corn and broken rice, amid concerns about domestic sugar supplies and prices
  • Finance Minister Nirmala Sitharaman said India's trade imbalance with China was growing sharply and attributed the problem partly to restrictions on Indian goods and services entering the Chinese market. China subsequently said it was ready to work with India to address mutual economic and trade concerns; India's trade deficit with China reached $69 billion in the first half of FY2026–27, up 27% year-on-year
  • Indian equity benchmarks extended their recovery on Friday, with the Sensex rising 413.66 points to close at 74,729.27 and the Nifty 50 gaining 148.80 points to settle at 23,146.15. Information technology shares, including Tech Mahindra, Infosys and TCS, helped lift the indices
  • India defeated Zimbabwe by four wickets in the opening women's T20 International in Raipur, taking a 1–0 lead in the three-match series. Deepti Sharma and Niki Prasad combined in an 82-run stand after India's top order collapsed, helping the hosts chase down Zimbabwe's total of 114 for five
  • Indian wrestler Komal won bronze in the women's 59 kg category at the Under-23 World Wrestling Championships in Las Vegas, defeating Kazakhstan's Viktoriia Khusainova 7–2. Fellow Indian Amruta Pujari advanced to the women's 72 kg final after recording two pinfall victories
  • Indian shuttler Jagsher Singh Khangurra secured a bronze medal at the BWF World Junior Badminton Championships in Cairo
  • The Supreme Court of India upheld the Bombay High Court's decision quashing the 2020 write-off of ₹8,415 crore in additional tier-1 bonds issued by Yes Bank (Yes Bank). The court ruled that the bank's administrator lacked the authority to extinguish the bonds under the final reconstruction scheme, strengthening bondholders' claims
  • The Supreme Court issued notices to the Election Commission of India, Delhi Police and opposition leaders, including Rahul Gandhi and Akhilesh Yadav, in separate petitions concerning electoral-roll revision and protests held in Delhi on October 10–12. The court also directed the preservation of CCTV footage linked to allegations of police excesses
  • The Supreme Court ruled that a person converting from Hinduism to Islam cannot automatically claim backward-class reservation benefits in the new religious community solely on the basis of their previous caste status. The judgment upheld the Madras High Court's decision striking down a 2024 Tamil Nadu government order that permitted such certification for specified communities
  • The Election Commission of India ordered a Special Summary Revision of electoral rolls in 14 states and three Union Territories, using January 1, 2027, as the qualifying date for voter eligibility. The draft rolls are scheduled for publication on November 12, claims and objections will be accepted until December 11, and the final rolls are due on January 4, 2027
Delhi HC refuses to ban CJP's Tiranga rally at Central Park in Connaught Place today /////// Police says will control and regulate it /////// NDMC closes the park for the public on Friday and Saturday
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Growth Versus Inflation: The Tricky Question Before RBI

By Linus Garg
First publised on 2022-11-29 05:46:35

About the Author

Sunil Garodia Linus tackles things head-on. He takes sides in his analysis and it fits excellently with our editorial policy. No 'maybe's' and 'allegedly' for him, only things in black and white.

As the Monetary Policy Committee of the RBI meets in the first week of December for its bimonthly review of policy rates, the growth versus inflation debate is once again in focus. While inflation seems to be moderating after reaching the peak of 7.8% in April, at 6.77% in October, it is still above the RBI's threshold of 6%. More importantly, core inflation is still high and rising. This means that inflation is not only due to high food and fuel prices but is broad based and as a whole, refusing to go away. Hence, since the apex bank is duty bound to bring it down, it needs to keep raising policy rates to stay ahead of the inflation curve. That this has an adverse effect on growth, already stymied by low demand, is a given. Hence, the MPC has the unenviable task of striking a balance between growth and inflation.

While the economic indicators are positive, yet most analysts have scaled down their earlier estimates of growth of Indian economy from 7% to about 6.5% in FY22. Further, with the global economy facing recession and consequently Indian exports also facing a slowdown, the outlook seems bleak in the short to medium term. WTO has warned that exports are set for further slowdown as its Goods Trade Indicator is at 96.2, lower than the baseline 100, indicating a slowdown. The only bright side is that the US Fed has indicated that its tight money policy and hiking of interest rates will not happen at the speed it was expected to. That will mean that flight of foreign capital from India will also slow down. The other good report is that crude prices have gone down to $81 per dollar and may ease further if Opec+ grouping does not cut production to shore up the falling prices.

Although it is important for the RBI to keep inflation in check and to stay ahead of the inflation curve (it was criticized in the past for having delayed its action in this respect), it is also important not to hike rates too much and too fast as it will hamper growth. If easing crude prices help in reducing inflation, the RBI will have space to slow down its money tightening measures. That would help in pushing for growth. 

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