oppn parties RBI Might Maintain Status Quo on Rates

News Snippets

  • JNU students march against the steep hike in fees, keep HRD minister Ramesh Pokhriyal stuck at the venue of the convocation
  • USFDA says Cytotron, an anti-cancer kit developed by Bengaluru based Rajah Vijay Kumar, is a "breakthrough device" for treating liver, pancreatic and breast cancers
  • Car sales show a minuscule uptrend after declining continuously for 11 months
  • Industrial output contracts by 4.3% in September, the worst decline in 8 years
  • Centre defends abrogation of Article 370 in the Supreme Court, says the power under it was used by the President six times previously
  • Legendary singer Lata Mangeshkar admitted to hospital with lung infection, put on ventilator
  • Shiv Sena MP Arvind Sawant quits as Union Minister
  • National Security Advisor Ajit Doval met the leaders of both Hindus and Muslims in Delhi on Sunday to ensure peace and harmony is maintained after the Ayodhya verdict
  • Tipu Jayanti passes off peacefully in Karnataka
  • 10 dead as Cyclone Bulbul leaves destruction in its wake in West Bengal
  • Shefali Verma breaks Sachin's 30-year old record by scoring an international fifty at 15 years and 285 days
  • Former Chief Election Commissioner T N Seshan dies at 87
  • India beat Bangladesh by 30 runs to win the 3rd T20 and clinch the series 2-1. Deepak Chahar becomes the first Indian to take a hat-trick in T20s and returns the best bowling figures of 6/7
  • Centre removes SPG cover of the Gandhis. However, they will still get Z-category security
  • CJI Ranjan Gogoi will have a meeting with UP chief secretary and DGP of the state in his chamber ahead of the verdict on the Ayodhya land dispute next week
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RBI Might Maintain Status Quo on Rates

By Ashwini Agarwal

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.