Rupa Rege NitsureThe MPC (Monetary Policy Committee) of the Reserve Bank of India is facing a tough challenge even after changing its policy stance to ‘accommodative’ in June 2019 and steadily reducing the policy rate by 135 bps last year.The economic growth momentum has stayed significantly weak. At the same time, upside risks to inflation have increased due to supply shocks and administered price adjustments. Against this backdrop, the MPC is expected to manage inflation without losing sight of weak growth and lingering financial sector fragility.Close First of all, the MPC has to accept that this is an exceptional phase for the Indian economy with the lowest real GDP growth in 26 quarters, the slowest real investment growth in 22 quarters, the weakest expansion in bank credit and NBFC (non-banking financial companies) loan disbursements in 10-11 quarters. Add to that unemployment at a 45-year high and the capacity utilisation rate of industry hovering near 68-69 percent due to sluggish demand. related news RBI’s three-year repo auction sees hefty demand Banking wrap: SBI says banks to pay price if any telco files for bankruptcy; Yes Bank in talks with investors for fund raising Monetary Policy: Non-standard steps, a seventies’ feel, and… Read full this story
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