oppn parties RBI Might Maintain Status Quo on Rates

News Snippets

  • Amit Shah says the government will identify and deport illegal immigrants from all parts of the country
  • Reports from Pakistan confirm that Hafiz Saeed has been arrested and sent to jail
  • After the SC order, Karnataka Speaker says he will go by the Constitution in deciding on the resignations of the 16 MLAs
  • Rebel MLAs say they will not attend the trust vote on Thursday
  • Supreme Court rules that rebel MLAs cannot be forced to attend the assembly and vote in the floor test
  • Both the Centre and the Assam government have sought re-verification of up to 20% of draft NRC data
  • Pakistan opens its airspace for Indian planes
  • Dilapidated building collapses in Mumbai, killing more than 10 people while many were still trapped
  • Kulbhushan Jadhav case verdict to be delivered today by the ICJ
  • A Vistara flight landed in Lucknow with just 5 to 10 minutes of fuel left in the tank
  • Supreme Court to decide on Karnataka MLAs plea today
  • Karnataka alliance to face floor test on Thursday
  • China says that the next Dalai Lama will be appointed by it
  • Pakistan assures India that no anti-India activity would be allowed in the Kartarpur corridor
  • Pakistan to allow visa-free access to 5000 pilgrims every day to undertake pilgrimage using the Kartarpur corridor
ISRO calls-off Chandrayaan-2 mission launch at last moment due to technical snags. revised date will be announced later
oppn parties
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.