New Delhi: The lower-than-expected RBI Monetary Policy Committee (MPC) has once again supported growth. Inflation is expected to remain high in the near term. Expectations of a 9.5 percent GDP growth for the current financial year have not changed. The adjustment trend in support of development was key decisions taken at the RBI MPC meeting for the third quarter (2021–22), which ended on Friday.
RBI Governor Shaktikanta Das said five members of the six-member MPC had approved the adjustment policy until the economy recovers and growth stabilizes. In the past, it was unanimously approved. It is noteworthy that one person disagreed with this installment. This suggests that rates are unlikely to rise in the near term. This is the seventh consecutive installment of RBI, keeping key rates unchanged. Finally, revised rates in May 2020. In view of the corona, then key rates were brought to the lowest minimums. Reduced rates by 2.5 percent overall from February 2019 to May 2020.
We will always be ready.
RBI Governor Shaktikanta Das has been alerted about the risk of another installment of corona breaking. ‘‘ We need to continue without giving up weapons. We will be on high alert for the third installment in view of the rising number of corona infections in various parts of the country, ”Das said. As the economy began to recover, Das mentioned the need to continue monetary, policy, and sector support at this crucial time. Corona said as the economy began to recover from the second phase, critical data showed that investment and demand were recovering.
Considering these factors, the RBI MPC has maintained its GDP growth forecast for 2021–22 at 9.5 percent. It expects GDP growth of 21.4 percent in the April-June quarter, 7.3 percent in the July-September quarter, 6.3 percent in the next quarter, and 6.1 percent in the last quarter (January-March 2022). It expects 17.2 percent growth in the first quarter of the 2022–23 financial year. Das said a significant reduction in interest rates would benefit both the real estate sector and homebuyers.
MPC Other Decisions
The corporate sector, which is under pressure due to the corona, has been given a boost. The RBI MPC has decided to extend the deadline for implementing various provisions laid down by the KV Kamath Committee on the debt recovery scheme by another six months until October 1, 2022.
Shaktikanta Das said the Rs 50,000 crore state-owned securities acquisition program (G-SAP 2.0) would be launched in two tranches in August. Its purpose is to ensure liquidity in all sectors.
As the economy is still recovering, the RBI MPC has decided to extend the On Tap Targeted Long Term Repo Operation (TLTRO) scheme for three months till December 31, 2021.
The variable rate reverse repo (VRRR) auction will be held on August 13 with Rs 2.5 lakh crore, on August 27 with Rs 3 lakh crore, on September 9 with Rs 3.5 lakh crore, and on September 24 with Rs 4 lakh crore. Thereby adjusting the liquidity in the system.
Inflation at its peak
The RBI MPC said inflation would be 5.7 percent for the current financial year, considering supply problems, high oil prices, and rising raw material costs. Inflation is expected to be 5.1 percent at the June MPC meeting.
Digital Rupee
There are opportunities to see the digital rupee soon. RBI Deputy Governor T. Rabishankar said the digital currency management model is likely to be announced by the end of this year. He said the RBI was internally evaluating the feasibility of introducing fiat digital currency, considering the scope, technology, distribution process, and so on.
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