Tag: Current Trends in Indian Economy

Current Trends in Indian Economy No change in interest rates: Reserve Bank of India (RBI) The Reserve Bank of India (RBI) has not made any change in the interest rate (repo rate) on short-term loans to banks. The interest rate remains unchanged at 6.50 percent for the fourth consecutive time. Earlier, the RBI raised the interest rate by 0.25 percentage points to 6.50 percent in the Monetary Policy Committee meeting held last February. It has been decided to keep the interest rate unchanged in the four meetings of the Monetary Policy Committee. In the financial year 2023-24, the economic growth of the country will be 6.5 percent. Our target is to keep inflation at 4 percent. However, inflation is likely to continue at 5.4 percent. About Monetary Policy Committee Created                   - 2016 Recommendation – Urjit Patel Committee Head              - RBI Governor Objective                – To maintain price stability Target                 – To control inflation within (4% +-2%)

Current Trends in Indian Economy Retail inflation surges Retail inflation resurged in July to hit 7.44% from 4.87% in June, with consumers facing a sharp 11.5% spike in food prices. This is the highest pace of retail inflation since April 2022 and the first time since September 2022 that price rise has been over 7%.  Vegetable prices soared 37.3%, mainly due to tomato, while cereals and pulses became over13% costlier, lifting the food bill by over 12.3% for urban consumers, while rural consumers encountered 11% food inflation.

Current Trends in Indian Economy MPC Meeting The Monetary Policy Committee (MPC) of the Reserve Bank of India decided unanimously to keep the policy repo rate unchanged at 6.5% even as it raised the projection for retail inflation in the current fiscal year by 30 basis points to 5.4%. The MPC retained its projection for real GDP growth in 2023-24 at 6.5%. To address the problem of excess liquidity with banks, the RBI decided that with effect from the fortnight beginning August 12, scheduled banks would maintain an incremental cash reserve ratio of 10% on the increase in their net demand and time liabilities (NDTL) between May 19, 2023 and July 28, 2023. About MPC Under Section 45ZB of the amended (in 2016) RBI Act, 1934, the central government is empowered to constitute a six-member Monetary Policy Committee (MPC). The Monetary Policy Committee shall determine the Policy Rate required to achieve the inflation target. Composition: (MPC shall consist of 6 members) RBI Governor as its ex officio chairperson, Deputy Governor in charge of monetary policy, An officer of the Bank to be nominated by the Central Board, Three persons to be appointed by the central government.

Current trends in Indian Economy  North East is the biggest beneficiary of GST  Assam was the first state to ratify the GST Act, four days after it was passed and since then there has been a 12 times increase in the collection of taxes and the northeastern states have benefited from the GST.  According to the 2023 RBI report on state finances, the eight NE states have registered a compounded annual GST hike of 27.5 percent, the finance minister said in Guwhati.  The GST's principal largely is on the basis of tax & consumption not just tax on the basis of where it is produced.  As a result, unlike the central sales tax, which is the origin base tax, GST is a destination based tax. About Assam Governor – Gulab Chand Kataria Chief Minister – Himanta Biswa Sarma  Capital – Dispur

Current Trends in Indian Economy Financial Stability Report (FSR) According to the Financial Stability Report (FSR), “Despite the global economy facing heightened uncertainty, the Indian economy and the domestic financial system remain resilient supported by strong macroeconomic fundamentals”. A bright spot India’s economy and financial system have remained stable despite global headwinds, says the RBI. Stress tests indicate that Indian banks will be able to withstand even severe stress scenarios. The balance sheets of both banks and corporates have strengthened to give India an advantage. The net non-performing assets of Indian banks dropped to 1% in March 2023.

Current Trends in Indian Economy World at critical point in inflation fight: BIS The Bank for International Settlements (BIS) has called for more interest rate increases, warning the world economy was now at a crucial point as countries struggle to rein in inflation. The longer inflation stays elevated, the stronger the required policy tightening, the BIS said, warning the possibility of further problems in the banking sector was now “material”. Inflation The Rate of increase in prices of goods and services over a given period of time and fall in the purchasing value of money. About BIS General Manager – Agustin Carstens HQ – Basel, Switzerland Founded – 1930

Current Trends in Indian Economy RBI holds rates, vows to keep price stability repo rate unchanged at 6.5% The Reserve Bank of India’s Monetary Policy Committee (MPC) decided unanimously keep the policy repo rate unchanged at 6.5% for the second straight meeting, with Governor Shaktikanta Das. Reverse repo rate – 3.35% About RBI Headquarters - Mumbai Governor - Shaktikanta Das Established - 1 April 1935 Report and Indices Food Safety Index 2023: Kerala, Punjab lead, TN slips to 3rd spot Food Safety and Standards Authority of India (FSSAI)’s 5th State Food Safety Index  (SFSI), which was released on 7 June by Union Health Minister Mansukh Mandaviya on the occasion of World Food Day. Among Larger States: Kerala has topped the Food Safety Index 2022-23. Tamil Nadu has slipped to third position. Punjab stood in the second position. Among smaller states: Goa stood first for the fourth time in a row.  It was followed by Manipur and Sikkim.  Last year, these three states were in the same position. Among Union territories: Jammu and Kashmir, Delhi, and Chandigarh secured first, second, and third ranks.  This is the third time, Jammu and Kashmir have secured first position.  Last year too, the three UTs had secured the same positions. Note In 2021-22, Tamil Nadu was in the top position among 20 larger states, followed by Gujarat and Maharashtra.  In 2020-21, Gujarat was in top position, followed by Kerala and then Tamil Nadu in the third position. The Index started in 2018-19. Objective - To create a competitive and positive change in the food safety ecosystem in the country. FSSAI is a statutory body established under the Food Safety and Standards Act, 2006  in ensuring healthy and nutritious food to the people.

Current Trends in Indian Economy 16th Finance Commission: Union government is gearing up to constitute the Sixteenth Finance Commission in November this year to recommend the formula for sharing revenues between the Centre and the States for the five-year period beginning 2026-27. About Finance Commission of India: Article 280 of the Indian Constitution laid down the provisions related to the constitution of the Finance Commission and the Finance Commission Act of 1951 supplemented the provision of the constitution. President Constitutes the Finance Commission every 5 years or at such time he considers necessary. The 15th Finance Commission was constituted by the President of India in November 2017, under the chairmanship of NK Singh. Its recommendations will cover a period of five years from the year 2021-22 to 2025-26. Composition of Finance Commission: The Finance Commission is a 5 member body that must have: A Chairman Four Other Members.

Current Trends in Indian Economy  India remained the world’s larges arms importer for the five-year period between 2018 and 2022  According to the Swedish think tank Stockholm International Peace Research Institute (SIPRI), Russia was the largest supplier of arms to India from 2013 to 2022, but is share of total imports fell from 64% to 45% while France is the second largest supplier.  

Current Trends in Indian Economy Manufacturing ends 2022 on a high note As per the S&P Global India Manufacturing Purchasing Managers’ Index (PMI), India’s manufacturing sector recorded its sharpest increase in output in 13 months in December 2022, with new orders rising at the fastest pace since February 2021. However the selling prices surged more than input costs for the first time in two and half years. The seasonally adjusted PMI reading for December 2022 rose to 57.8 from 55.7 in November, reflecting ‘a robust improvement in the health of the sector that was the best seen since October 2020’. For the October to December quarter, the PMI averaged 56.3, the highest in a year. Note The Purchasing Managers' Index (PMI) is an index of the prevailing direction of economic trends in the manufacturing and service sectors. PMI focuses mainly on the five major Survey Areas: Employment New orders Production Inventory levels Supplier deliveries