oppn parties Monetary Policy: Prioritizing Growth

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  • Supreme Court sentences Congress leader Navjot Singh Sidhu to one year rigorous imprisonment in the 1988 road rage case
  • Home Minister Amit Shah says rights should not be demanded before fulfilling responsibilities and that universities are no place to wage ideological battles
  • NIA court convicts JKLF chief Yasin Malik in terror funding case after he pleads guilty of all charges
  • A study backed by PM-EAC has recommended universal basic income and urban job guarantee and greater spend on social sector schemes
  • Supreme Court rules that the decisions of the GST Council are not binding on the Centre and the states, leaving the door open for states to levy further taxes
  • After sustained campaign by BJP MP Arjun Singh, the Centre today withdrew the jute price cap order, industry welcomes move
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  • IPL: RCB crushes GT by 8 wickets as Virat Kohli returns to form with a well-made half century
  • Nikhat Zareen is world champion in flyweight category. Wins gold at Women's World Championships at Instanbul
  • Supreme Court uses its special powers under Article 124 to release A G Perarivalan, a Rajiv Gandhi assassination convict
  • Indrani Mukherjea, prime accused in the Sheena Bora murder case, gets bail from Supreme Court after 6.5 years in jail
  • Hardik Patel quits Congress, says top leaders distracted by mobile phones and state leadership busy arranging 'chicken sandwiches' for them
  • Anil Baijal resigns as Lieutenant Governor of Delhi citing "personal reasons"
Nikhat Zareen is crowned world champion in the flyweight (52Kg) category at the Women's World Championships in Istanbul /////// Supreme Court sentences Navjot Singh Sidhu to rigorous imprisonment of one year in the road rage case /////// Sunil Jakhar, who quit the Congress a few days ago, joins the BJP
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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.