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The Reserve Bank of India has to decide whether to keep the interest rates steady or risk raising it to stem market pressure.
Data showed a positive change in India’s economy after Modi tweaked the GDP calculation, but those gains got eroded after 2016's sudden cash clampdown.
IMF report also says India is poised to grow at 7.4 per cent in FY 2018-19, thus making it one of the fastest growing economies in the world.
The report points out that though the phase after 2014 has been labelled a period of rural distress, the gap between average growth in rural wages and rural inflation is not so significant.
Despite lowering inflation projections just two weeks ago, the tone of the minutes show the debate was veering toward a possible interest rate increase and the next meeting could see the split deepening. The most hawkish member of India’s monetary policy panel is likely to get support from an influential colleague, signaling an interest rate increase is more probable than a cut. At the April 4-5 policy meeting, Deputy Governor Viral Acharya said there was a revival in investment activity and an improvement in capacity utilization, which boded well for the economy. As a result, he was switching from a neutral stance to shift “decisively to vote for a beginning of ‘withdrawal of accommodation’ in the next monetary policy meeting in June.” Minutes of the policy meeting this month showed most members of India’s monetary policy committee are optimistic that Asia’s third-largest economy will rebound this year with the output gap closing, a...
His government is seeking to pay farmers at least 50 percent more than the cost of their produce which is expected to fan prices at a time when oil is surging, putting further pressure on bond yields.
The ADB report also sees economy recovering to grow at 7.3 per cent in 2018 and 7.6 per cent in 2019, aided by various growth-oriented policy measures.
The central bank's decision is expected to help extend a rally in the bond market, triggered last week when the government cut its first-half borrowing plans.
The central bank has said that the economic recovery is on a stable path, but said inflation risks persist.
The central bank has raised its inflation forecast for the fourth quarter of the fiscal to 5.1 per cent