oppn parties Monetary Policy: Prioritizing Growth

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  • T20 WC: USA enter Super Eights as their last match against Ireland gets washed out. They were ahead of Pakistan in the points tally. Pakistan were eliminated
  • T20 WC: USA enter Super Eights as their last match against Ireland gets washed out. They were ahead of Pakistan in the points tally. Pakistan were eliminated
  • BJD leader and former Odisha CM Naveen Patnaik said that the criticism of his aide V K Pandian is "regrettable"
  • As more than 20 BJP ministers lost in the recent elections, the new Union cabinet will have many new faces from the party
  • Congress Working committee asks Rahul Gandhi to take up the position of Leader of Opposition in Lok Sabha. Gandhi says he will consider the request
  • RBI governor Shaktikanta Das said that gold was shifted to India as the quantum of RBI gold abroad had increased due to recent purchases
  • Delhi HC rules that submitting photographic evidence of adultery will not be enough, they will have to be proved as authentic in the age of deepfakes
  • A four-member panel will review NEET-UG results of 1563 candidates to check if they were given extra marks for exam time loss
  • Mamata Banerjee says her party will not join Modi's oath-taking ceremony. Also says INDIA bloc might stake claim to form government later
  • K C Tyagi of the JD(U) dropped a bombshell when he said that Nitish Kumar was offered the post of prime minister for switching sides. Opposition leaders rubbished the claim
  • This May was India's hottest month in 36 years says IMD
  • T20 WC: India take on Pakistan today. Telecast to begin at 8pm IST
  • T20 WC: Afghanistan stun New Zealand and Bangladesh win against Sri Lanka
  • T20 World Cup: Australia beat England by 36 runs. This spoils England's chances of making the playoffs as they have lost both their matches till now
  • Heat wave continues in the country as monsoon moves slow
G7 commits to promote India-Europe corridor
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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.