oppn parties Monetary Policy: Prioritizing Growth

News Snippets

  • Maratha quota bill likely to be tabled in Maharashtra assembly today
  • Arvind Kejriwal skips ED summons for the 6th time, says the case is in court and will follow court's decision
  • PM Modi says UP has gone from 'red tape' to 'red carpet' in 7 years of 'double engine' government
  • Farm unions reject government offers, to resume Delhi march from today
  • Centre says some Aadhar cards in Bengal 'deactivated' due to technical glitz, will be activated back soon
  • Supreme Court stays LS privilege panel summons to Bengal officials over BJP MP Sukanta Majumdar injury case
  • Supreme Court junks Sandeshkhali petition, says it cannot be compared to Manipur, asks petitioner to approach Calcutta HC
  • Supreme Court gets tough on Chandigarh mayoral elections, asks for ballot papers and video footage, does not order re-election
  • Government starts withdrawing old small tax demands, up to Rs 25000 per entry till FY 2009-10 and up to Rs 10000 per entry from FY 2010-11 to FY 2014-15 with an overall ceiling of Rs 1 lakh per tax payer
  • Stocks remained positive on Monday: Sensex gained 281 points to 72708 and Nifty 81 points to 22122
  • Jasprit Bumrah likely to be rested for 4th Test while K L Rahul may be back
  • FIH Pro League hockey: India beat Spain 8-7 in shootout
  • SP leader Salim Sherwani, miffed at no Muslim candidate given RS ticket, quits party
  • Army going for big (Rs 57000cr) upgrade in combat vehicles to replace T-72 tanks
  • Mamata Banerjee says the BJP is doing nothing to resolve the Sandeshkhali dispute but instead fanning the fires to escalate it
History created in Supreme Court as Chandigarh mayoral poll ballots counted in court, judges declare AAP candidate Kuldeep Kumar winner after taking into account the votes defaced by returning officer Anil Masih
oppn parties
Monetary Policy: Prioritizing Growth

By Linus Garg
First publised on 2021-08-07 07:25:17

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.

The Monetary Policy Committee (MPC) of the RBI decided to maintain status quo on interest rates while maintaining the accommodative stance. Governor Shaktikanta Das was of the view that it is imperative to provide further support to revive the economy. However, the MPC revised the inflation outlook from 5.1% to 5.7% this year as fuel and food basket prices show no sign of going down in the near term. It also kept the growth forecast at 9.5% for FY22.

It is good that despite rising inflation (although within the limits prescribed by the RBI), the MPC has maintained status quo on rates as well as an accommodative stance. It is also good that the apex bank has not initiated any measures to squeeze out liquidity from the financial markets. The economy is showing signs of revival after the second wave and this is evident from impressive numbers from many quarters.

First off, GST collections once again topped the Rs 1 lakh mark in July after going down in the previous two months. Exports touched a record high of $35.2bn in July. The Purchase Manager's Index touched 55.3 points indicating increased activity in the manufacturing sector. Railways reported record freight bookings in July, surpassing the earlier record achieved in July 2019. The stock markets are on fire and IPOs are being lapped up by retail investors and institutions alike. There is a buzz around the economy and this is the time when RBI support is vital.

Although banks have reported that there are no quality projects that are coming up for appraisal and hence credit off-take is low, but that is because times were uncertain till now. It is hoped that entrepreneurs will now plan new projects or expand existing ones and the demand for bank loans will go up substantially from the third quarter of FY22. With interest rates low and consumer demand rising, this is the time when the economy will truly revive if the third wave of coronavirus does not play spoilsport.