oppn parties RBI Might Maintain Status Quo on Rates

News Snippets

  • Former Pakistani cricketer Shoaib Akhtar proposes an Indo-Pak ODI series to raise funds for fighting coronavirus
  • Maharashtra government says many Tablighi Jamaat members who attended the Markaz and returned have gone into hiding
  • West Bengal government identifies hotspots in Kolkata and the rest of the state, inclined to extend the lockdown in those places only
  • Prime Minister Modi holds a video conference with floor leaders of opposition parties, hints at extending the lockdown
  • UP seals hotspots and makes masks mandatory
  • Masks made compulsory in Mumbai, violators will be arrested
  • ICMR says an infected person can infect 406 people in 30 days without social distancing and lockdown
  • Stock markets make a smart recovery. Sensex up by record 2476 points on global cues
  • Schools, colleges and shopping malls likely to remain closed for a further period of one month, says empowered group of ministers
  • PM Modi tells BJP workers that India is in for a long battle against the coronavirus and there is no scope to feel tired or defeated
  • PM Modi asks ministers to focus on exports and new areas and sectors
  • PM Modi asks ministers to prepare business continuity plan post the lifting of the lockdown
  • Corona cases in India cross 4000 and the death toll stands at 124
  • The government decides to double the testing of corona suspects from 10000 now to 20000 in the next three days
  • Flipkart assures employees that there will be no job or salary cuts due to the COVID-19 pandemic
COVID-19: 773 new cases and 32 deaths in the last 24 hours, reports the health ministry
oppn parties
RBI Might Maintain Status Quo on Rates

By Ashwini Agarwal
First publised on 2017-10-03 15:32:55

Since the economy is worse off than it was in August when the last policy review of the RBI’s Monetary Policy Committee (MPC) had taken place, one can safely assume that the body will either maintain status quo on key rates or might even take a hard stance. Ideally, a rate cut is the prescribed medicine for a depressed economy. But India is different and a standalone rate cut, without massive stimulus from the government, is unlikely to help.

The overall mood in the economy is depressed. Inflation has increased on the back of rising food prices. Hence, the MPC will definitely downwardly revise the growth figures. None of the other scenarios or figures provide any comfort. The monsoon was abundant, with only a 5 percent shortfall. But it was highly unevenly distributed, resulting in disturbing predictions for some crops in some regions. This does not augur well for food prices in the coming months, with shortages from drier regions adding to the pressure. It also means that at least some of the farm loans will again have a political write-off, further stressing the PSU banks.

The IIP has not picked up as fast as it was expected to. GST disruption, actual and feared has played a big part in this. The September & October figures may bring some cheer due to the huge festival demand, but on-ground whispers suggest that the growth in festival purchases, both of white goods and fashion apparels, was not as expected.

All this means that the wise heads who gather to debate on monetary policy have a tough task ahead of them. Hence, it is expected that they will play safe and let another two months go by with the same rates.