Committee on monetary policy sees glass half empty- (Reserve Bank of India) (28 Apr 2016)
MANU/RPRL/0123/2016
Banking
The minutes of the 40th meeting of the Technical Advisory Committee on monetary policy painted a fiscal picture somewhere between bleak and tepid. Its predictions for Indian growth were cautious, noting inflation volatility, weak corporate sector growth and only modest rises in domestic consumption-led growth. It assessments on global trends were less optimistic: expected are lower growth rates, deflated oil prices in the near future and a reduction in global trade.
The Committee was also dubious about the government’s budget for 2016-2017. It expressed unhappiness over the fiscal deficit the government has decided to run in the near future, which suggested its reliance on expected revenues rather than reduced expenditure. Also criticised was the “poor transparency” with regards to funding for one rank one pension and the 7th Central Pay Commission.
It showed building consensus over a further reduction in repo rate. While one member suggested status quo, more popular was a rate cut of 25 basis points. The Committee reiterated the need to achieve “hard credibility”, staying on course for long term goals rather than pandering to populist demand.
Tags : MONETARY POLICY REPO RATE FISCAL DEFICIT GLOBAL TRADE
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