Economy
Present economic scenario to persist awhile

On the macroeconomic front, the economy is expected to grow at 7.6 percent

 

The Reserve Bank of India (RBI), on April 5, released its first bi-monthly monetary policy statement and with it, the monetary policy peport for April 2016. While the statement detailed some of the decisions, the policy report has an in-depth assessment of the current economic scenario and what to expect in the months ahead.
 
The primary decision in the statement was to reduce the repo rate by 25 basis points from 6.75 percent to 6.5 percent. The move is seen as following the broad principles of stabilisation within the economy and the RBI is accordingly seen as normalising the policy rates to banks so that they can lend to push for growth.
 
The reverse repo was adjusted to six percent, down 25 basis points. Apart from this, the minimum daily maintenance of cash reserve ratio (CRR) is also adjusted to 90 percent from the present 95 percent. The RBI has also indicated in the statement that a fresh discussion paper would be put out on how large borrowers are meeting a part of their funding requirements from markets by April 30, 2016. Apart from this, a draft circular on large exposures framework will also be issued for public comments in June 2016.
 
The underlying rationale for the decision has been the contents of the monetary policy report for April, which broadly speaking, looks at four factors the macroeconomic outlook inflation and prices, aggregate demand and supply, financial markets and liquidity conditions and external environment.
 
On the macroeconomic front, the economy is expected to grow at 7.6 percent. Inflation has been in check due to sound fiscal and monetary policies. Apart from this, two other developments will have a bearing on targeting inflation. One of these is the adoption of the flexible inflation targeting (FIT) framework which positions maintaining inflation between 4 ± 2 percent. The other is the adoption of the monetary policy committee for a decision on the monetary policy of the country which is at present taken by the RBI governor.
 
The outlook for growth remains upbeat but some factors can impinge on growth. These include lower investment demands due to corporate debts and tepid global output and trade growth leading to a fall in exports. On the positive side, the RBI mentions the government's Start-p initiative as well as strong commitment to fiscal targets, and a thrust on boosting infrastructure which could brighten the growth prospects going ahead.
 
On the aggregate demand and supply front, according to the report, domestic activity seems to have slowed in the second half of 2015-16. Aggregate demand was restrained due to a combination of stalling of fixed investment, weak rural consumption and ongoing fiscal consolidation. Aggregate supply seems to have moderated with the impact of deficient monsoon on agriculture. Similarly, GVA (gross value added) in industry benefited from a decline in input costs while the services sector remained in an expansion mode.
 
Different markets experienced different things ranging from insulation to bouts of volatility. Money, credit and bond markets were relatively well-insulated while foreign exchange and equity markets experienced bouts of volatility. Liquidity conditions tightened in the second half of the year. However, the flow of resources to the corporate sector remained buoyant. The overall conditions in the markets remained robust.
 
On the external environment front, the report noted that global economic activity slackened further, and international trade remained subdued while downside risks have increased. Weak demand and low commodity prices have rekindled fears of deflation in some advanced economies which have led to divergence of policy stances. The emerging markets remain vulnerable to swings in sentiments and capital outflows going ahead.
 
What the report seems to be suggesting is that the present economic situation of weak global growth with low global commodity prices and subdued trade growth is going to persist for some time in the future.
 
Overall, the statement and the report do well to explain the global and Indian economic scenario at present and the monetary policy response to the overall situation. In the coming months, all eyes will be on the global economy and the monetary policy stances of various central banks across the world.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

User

Kerala fire tragedy: Six Puttingal officials arrested

Officials are being questioned by the crime branch team led by Deputy Superindent of Police Radhakrishnan Pillai at the Kollam Crime Branch office

 

Two days after the fireworks tragedy at Puttingal Devi temple in Paravur in Kollam that left 109 people dead and more than 350 injured, police on Tuesday recorded the arrest of six temple officials.
 
Five officials who surrendered before police late Monday night include P.S. Jayalal (president), Krishnankutty Pillai (secretary), J. Prasad, Somasundaram Pillai and Ravindran Pillai -- all top office bearers of the temple. The sixth official - Surendran Pillai, was arrested on Tuesday morning. 
 
They are being questioned by the crime branch team led by Deputy Superindent of Police Radhakrishnan Pillai at the Kollam Crime Branch office.
 
Paravur police had earlier charged around 30 people including the temple committee members, the contractors of the fireworks display and his workers under charges of culpable homicide.
 
Five workers of the fireworks contractor Surendran are already in the custody of the police team and they have confided to police about the nature of the firework display.
 
The temple officials, after the tragic incident that occurred around 3.30 a.m. on Sunday, had gone into hiding.
 
On Sunday, the Kerala government had ordered a judicial probe and a crime branch probe.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

User

Indian Railways 'water train' reaches parched Latur

The Indian Railways on Monday dispatched the 10-wagon train carrying the precious liquid of life from Miraj in western Maharashtra for Latur city in the Marathwada region

 

The 'water train' dispatched by Indian Railways as a humanitarian gesture for the parched Latur district in Maharashtra, carrying around 550,000 litres of drinking water, reached here on Tuesday, officials said.
 
The Indian Railways on Monday dispatched the 10-wagon train carrying the precious liquid of life from Miraj in western Maharashtra for Latur city in the Marathwada region.
 
The train, that reached here around 4 a.m. after covering a 375 km journey, was welcomed with cheers and a sense of relief by Latur mayor, top civil and police officials even as tight security was deployed around the railway station.
 
The offloading of the water began at a dried up well belonging to a local farmer near the railway station, after which it will be transported by pipes to a filtration plant.
 
After flitering it and making the water potable, it will be sent to the intended remote villages in tankers, who are eagerly waiting with kilometers-long queues of multicoloured plastic and steel buckets, pots and pitchers lined up by the hopefuls awaiting the water.
 
The initiative was taken by Railway Minister Suresh Prabhu a few days ago as many parts of his home state reeled under severe water crises, especially villages in Latur district, which has a population of around 2.45 crores.
 
Following Prabhu's directives, 50 tank wagons, similar to the ones used to transport oil and milk, were sent to Kota workshop (Rajasthan) on April, they were thoroughly cleaned and sent for the onward journey to Sangli.
 
The IR is planning to make a few more similar need-based trips to quench the thirst of Latur villages, the schedules of which are not yet finalised.
 
Currently, around 15,000 villages in the state, a majority of them in Latur, Beed and Osmanabad district, are gripped by an acute water shortage.
 
To combat stray incidents of violence, in many parts, police have imposed prohibitory orders till May 3. Besides, public water storage tanks and reservoirs have been provided armed guards.
 
Similarly, villagers in some areas trek more than two km daily for a pot of water and keep their domestic water stocks under lock-and-key, schools have been shut down, marriages and other social events have been cancelled or postponed and agriculture activities at a complete standstill.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)