News Snippets

  • West Bengal governor calls major political parties for a meeting in a bid to stop post-poll violence in the state
  • Police stop BJP protestors from reaching police headquarters in Kolkata leading to clashes
  • PM asks all ministers to reach office by 9.30 am. Also asks senior ministers to guide new comers
  • NIA raids seven places in Coimbatore over suspected IS module
  • UP Bar Council chief, elected just three days back, shot dead on Agra district court premises
  • Isro to launch Chandrayaan-2 on July 15
  • The NRS hospital incident snowballs into a major crisis in West Bengal, affecting delivery of healthcare across the state
  • India play New Zealand in the World Cup today. Both teams are the only unbeaten teams left in the tournament
  • Congress thinking of having an interim president as the headless party is being torn apart
  • Temperatures in Delhi soar up to 48 degrees, the highest on over 20 years
  • Yuvraj Singh announces retirement from international cricket
  • SC to hear plea of the wife of journalist Prashant Kanojia, who was arrested for an alleged defamatory post on UP CM Yogi Adityanath
  • Modi asks all secretaries in the government to think of themselves as the PM while implementing strategies
  • WB governor KN Tripathi says he has not submitted a report that calls for the dismissal of the state government
  • Mamata Banerjee compares herself to a wounded tigress and warns the BJP against dislodging her government over post-poll clashes
Agitating doctors refuse to hold closed-door meeting with West Bengal CM Mamata Banerjee. They ask her to visit NRS Hospital instead for an open meeting
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RBI Cuts Rate, Changes Stance To Accommodative

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Sunil Garodia By our team of in-house writers.

Benign inflation, slowing economy and the return of NDA (that assures continuity in policy and the hope of a renewed sense of fiscal responsibility on the part of the government) has allowed the RBI to change its policy stance from neutral to accommodative and reduce the key repo rate by 25 basis points to 5.75 percent, the lowest since September 2010. The change in stance also means that further rate cuts are in the offing.

Although the markets were not enthused by the rate cut (the Sensex crashed by 554 points after the announcement) there are many positives in the RBI decision. All economic indicators are signaling a slowdown with demand for goods and services not picking up. Some sectors are showing negative growth. Although it is true that projects are not dependent only on the interest rates (promoters factor in the cost of acquiring capital in their overall project costs and go for the project if they can sell the products after acquiring capital at current interest rates), it is also true that some projects that seemed unviable at high interest rates may become viable at lower costs. Lower interest rates on retail loans may also spur the demand for goods thereby giving a boost to the manufacturing sector.

The economy needs a push and making capital available at a lower cost is one of the ways to encourage entrepreneurs to expand capacity or go for new projects. The RBI has made it known that it will prod the banks to pass on the benefit to customers. If there is a renewed demand for products due to cheaper loans which in turn encourages entrepreneurs to expand or install new projects then the economy will come out of the morass it seems to be sliding in. But the government will have to play its part by keeping a tight control on fiscal deficit and making investments in infrastructure.