IPA Newspack
  • Home
  • now
  • politics
  • business
  • markets

IPA /

Business

Business

Jump in Covid-19 Cases, Lockdowns Add Uncertainty to Growth Outlook, Says RBI Guv


The uncertainty created by the jump in Covid-19 infections and localised lockdowns prompted RBI Governor Shaktikanta Das and other members of the rating setting panel MPC to unanimously vote for status quo in interest rates and an accommodative policy stance to support growth, as per minutes of the meeting released on Thursday. “The need of the hour is to effectively secure the economic recovery underway so that it becomes broad-based and durable,” the Governor said during the three-day meeting of the Monetary Policy Committee (MPC) which ended on April 7.

The renewed jump in COVID-19 infections in several parts of the country and the associated localised and regional lockdowns add uncertainty to the growth outlook, he observed, as per the minutes of the meeting released by the central bank. “In such an environment, monetary policy should remain accommodative to support, nurture and consolidate the recovery. We need to continue to sustain the impulses of growth in the new financial year 2021-22,” Das argued.

The MPC, consisting of Das, Michael Debabrata Patra (RBI Deputy Governor), Mridul K Saggar (RBI Executive Director) and three external members — Shashanka Bhide, Ashima Goyal and Jayanth R Varma — had voted in favour of retaining the repo rate unchanged at 4 per cent. Patra said monetary policy has to remain supportive of the economy until the recovery is more sure footed and its sustainability assured. He noted that longer term inflation expectations remain broadly stable in spite of high volatility in food and fuel prices.

“Demand pull is still weak,” he said, adding he would continue to look through the recent elevation in inflation and remain focused on reviving the economy on a path of strong and sustainable growth. “An integral part of this approach would be to insulate domestic financial markets from global spillovers and volatility so that congenial financial conditions continue to support growth,” he opined.

Mridul K Saggar said it was equally important to understand that while increasing fiscal space to the extent possible is desirable, any revision in fiscal targets should be consistent with medium-term debt sustainability and should not impinge on conduct of monetary policy, such as requiring direct monetisation that has been eschewed even by countries with low inflation.

According to him, the current account deficit in small size as expected is least of a worry, but going forward, with wide fiscal gaps, large twin deficits must be avoided over the medium term. “While we had moved towards calibrated exit from extra-ordinary supportive measures to mitigate the impact of Covid-19 as the curve was flattening, we have already made considerable adjustments in exit dates for these measures.

“The extant priority is now to continue supporting growth from the possible shock from the second wave,” he said, while voiting for retaining the policy rate and continue with the accommodative stance. Quoting Marie Curie, he said, “Nothing in life is to be feared, it is only to be understood. Now is the time to understand more, so that we may fear less.”

Jayanth R Varma said the economic recovery after the pandemic shock of 2020 remains uneven and incomplete, and the renewed jump in COVID-19 infections in certain parts of the country has increased the downside risk to the growth momentum. On the other hand, inflation rates have been consistently well above the mid point of the target zone and is forecast to remain elevated for some time.

“This is a difficult situation, but I believe that the balance of risk and reward is in favour of monetary accommodation,” he said.

As per the minutes, Ashima Goyal said India’s cautious approach to capital account convertibility means that volatile fixed income flows are still capped at 6 per cent of outstanding stocks of G-Secs. Large foreign exchange (FX) reserves, acquired during surges in inflows, are sufficient to counter outflows due to rising US G-Sec rates without having to raise domestic rates, Goyal said, and added sale of FX stocks will release space on the RBI’s balance sheet to buy more Indian government securities consistent with its target for creation of durable liquidity.

Shashanka Bhide said expansion of supply of goods and services in public and private spheres will require new investments and access to funds. The monetary policy environment so far has provided support to sustaining economic activities and recovery of growth, Bhide said, while adding that such policy environment is needed to strengthen and broaden the ongoing recovery process. The next meeting of the MPC is scheduled during June 2 to 4, 2021.

Read all the Latest News and Breaking News here



With inputs from News18

Happening Now

Muslim body chief condemns Udaipur killing as un-Islamic

June 29, 2022
Happening Now

Owaisi condemns killing, but with a rider

June 29, 2022
Politics

Uddav plays emotional card in bid to win over rebels

June 29, 2022
Politics

Four BJP panels to work out preparations for 2024

June 29, 2022
IPA Special

Uddhav’s Soft Hindutva Is Being Challenged By Shiv Sena Hardliners

June 28, 2022
IPA Special

100% Electric Two-Wheeler Penetration In India Possible By 2031

June 28, 2022
IPA Special

AltNews Co-Founder’s Arrest By Delhi Police Is A Violation Of All Laws

June 28, 2022
IPA Special

United States Supreme Court Is Using Its Unchecked Power Against People

June 28, 2022
IPA Special

Supreme Court’s Judgment In Gujarat Riots Case Bodes Ill For Democracy

June 28, 2022
IPA Special

Tripura Bypoll Results Showed The Faultlines Of Trinamool Congress

June 28, 2022
IPA Special

Congress In Kerala Loses The Perception Battle

June 28, 2022
Happening Now

Governor may ask for trust vote in Maharashtra tussle

June 28, 2022
Politics

Uddhav was ready to quit, but allies prevailed over him

June 28, 2022
Politics

Simranjit Mann’s win revives broom vs. sword debate

June 28, 2022
Happening Now

Rahul Gandhi blasts Alt News co-founder Zubair’s arrest

June 28, 2022
Happening Now

Fuel shortage forces Lanka to allow only essential services

June 28, 2022
Politics

Victory of Bal Thackeray’s Hindutva, claims Shinde

June 27, 2022
Happening Now

Key Uddhav aide Raut summoned by ED for ‘money laundering’

June 27, 2022
IPA Special

There Is Little To Justify India’s Coal Shortage

June 27, 2022
IPA Special

Central Trade Unions Get Ready To Fight New Rules For Workers

June 27, 2022

An appeal

The legacy of IPA, founded by Nikhil Chakravartty, the doyen of journalism in India, to keep the flag of independent media flying high, is facing the threat of extinction due to the effect of the Covid pandemic. Only an emergency funding can avert such an eventuality. We appeal to all those who believe in the freedom of expression to contribute to this noble cause.
Click here to learn more

Share

Reply

  • 0
More on IPA

No wheat-like export restriction for rice immediately

May 28, 2022 5:37 am | IPA Staff

India does not plan to curb rice exports as the world’s biggest exporter of the staple has sufficient stocks and local rates are lower than...

Business

Quad initiative to monitor Indo-Pacific maritime activities

May 25, 2022 12:01 am | IPA Staff

Four-nation grouping Quad on Tuesday launched a major new initiative for the Indo-Pacific that allows the partner countries to fully monitor the waters on their...

Business

M’rashtra, Kerala, R’sthan cut fuel VAT after central cut

May 23, 2022 6:35 am | IPA Staff

Maharashtra, Rajasthan and Kerala have decreased VAT on petrol and diesel after Finance Minister Nirmala Sitharaman’s call to provide further relief to consumers following a...

Business

RBI to pay Rs 30,307 crore dividend to govt for FY22

May 21, 2022 1:38 am | IPA Staff

  Reserve Bank of India (RBI) on Friday said its board has approved a dividend payment of Rs 30,307 crore to the government for the...

Business

No wheat-like export restriction for rice immediately

in Business
May 28, 2022   ·  

Quad initiative to monitor Indo-Pacific maritime activities

in Business
May 25, 2022   ·  

M’rashtra, Kerala, R’sthan cut fuel VAT after central cut

in Business
May 23, 2022   ·  

Leave a Reply Cancel reply

You must be logged in to post a comment.

Follow us on
Up Next: Over 79 Pc Voter Turnout Recorded Till 5 Pm
©2020 -2021 India Press Agency, All Rights Reserved
Newspack by India Press Agency
Posting....
logo
  • Home
  • now
  • politics
  • business
  • markets