Suspense Crime Sach Ka Dam
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New Delhi: In the midst of falling inflation in the country, the Reserve Bank today dashed the market’s expectations of a reduction in interest rates in the coming days. Addressing a meeting of the Confederation of Indian Industry (CII) in New Delhi, Reserve Bank Governor Shaktikanta Das said the war against inflation is far from over and there is no reason to be complacent.
The war against inflation is not over yet. The situation is very changeable. Still need to be cautious and not complacent. At the CII meeting, Das said, “It is important to keep an eye on El Nino when there is a threat forecast.”
Consumer price inflation is taken into account to determine the interest rate in India. The CPI was 5.66 per cent in March and 4.7 per cent in April. The Reserve Bank’s monetary policy requires keeping the inflation rate between 2 and 6 percent. Kharif crops in India are grown on the basis of four months of monsoon from June to September. It is said that if the rains are good, agricultural production will increase and this will benefit the rural economy. However, American and European agencies are predicting that due to El Niño, ocean temperatures will be lower and coastal areas will be higher, there will be a lack of rain or drought in some parts. In this situation, if the production of agricultural products decreases, it is likely that prices will remain high and inflation will increase.
In a suddenly called meeting in April 2022, the Reserve Bank started increasing interest rates. After this, the interest rate was increased by 2.50 percent in a phased manner and in the last meeting it was decided to keep the repo rate constant. “Even when we suddenly called a meeting and increased the interest rate, we proved to be prudent and now we are working prudence to keep it stable while monitoring the situation,” the governor said. The impact of the 2.5 per cent interest rate hike on the economy is awaited.
The condition of the global economy has been changing continuously for the last two and a half years due to rising inflation due to Corona pandemic and then Russia-Ukraine war, low supply versus demand and efforts by various countries to reduce financial liquidity in the country. market. In India, interest rates for overnight money, which are higher than the repo, have raised concerns with the Reserve Bank about liquidity in the market. To address this concern, the Reserve Bank had auctioned the variable repo. According to the Reserve Bank, there was an additional cash of Rs 1 lakh crore in the market, but there was a shortage of cash in some banks and institutions, so cash of Rs 50,000 crore was infused.
Decline in exports is a threat to the economy
India’s record tax revenue and services sector metrics in April suggest the economy is on the upswing but rising unemployment and declining exports could pose challenges for the economy. According to Bloomberg research, six out of eight economic indicators show that growth is picking up, but there could be some concerns as the economies of India’s export market countries are slowing down. India’s exports declined by 12.7 percent in April. There is a possibility that the economy of America and Europe, India’s main export markets, will go into recession or grow at a very low rate, so exports may decline in the coming days.
