After the Centre’s big-bang stimulus in the form of sharp cut in corporate tax rate, all eyes are on the RBI’s future rate action. After the massive fiscal expansion, will the RBI continue with its monetary easing?
Or will the central bank exercise caution and rein in rate cuts in the light of such a significant slip in fiscal deficit?
A day before the Finance Minister announced the mega corporate tax cut, RBI Governor, Shaktikanta Das, had indicated that there was limited space for fiscal measures. But with the RBI Governor hailing the Centre’s corporate tax cut as a ‘bold measure’, it is now unclear if the RBI would view the fiscal expansion as a deterrent to further rate cuts.
On the data front, growth slowdown in the domestic market and a favourable inflation trend, point to the possibility of further rate cuts. Weakening global growth and wave of monetary easing across central banks also support further monetary easing by the RBI (though there is less ammunition left with global central banks to address the growth slowdown). On the flip side, expansionary fiscal and monetary policy throw open risks to macroeconomic stability, which need a close watch.
Given all of this, the repo rate can move from 5.4 percent at present to 5-5.25 percent by the end of the fiscal, implying token one to two rate cuts at best. Since 2000, repo rate has fallen to a lowest of 4.75 percent in April 2009.
Denne historien er fra September 24, 2019-utgaven av The Hindu Business Line.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra September 24, 2019-utgaven av The Hindu Business Line.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
Covid Presents An Opportunity For India
India must attract investors exiting China post-Covid. Streamlining of project clearances and relaxation in FRBM norms will help
Did Alternative Assets Shield You From Covid-19 Volatility?
The assets closely linked to stock and debt markets could not stave off the losses
How To Put Aircraft To Bed
Preserving grounded planes, to get them up and flying at short notice, is a challenging task. Ashwini Phadnis captures the process
There Can Be No Going Back On WFH
Covid-19 has fast-forwarded the shift to ‘work from home’. However, some face-to-face connect will always be needed
UN, WHO Urged To Ensure ‘Benefit Sharing' Of Covid-Related Data
Biopharma firms should reach vaccines, medicines to poor nations at an affordable price, say civil society bodies
With No Clear Signal From Rlys, States Explore Ways To Bring Back Migrants
Quarantine centres, cross-country buses being arranged even as migrants hop on to boats, trucks and ambulances
Centre Allows All Neighbourhood Shops To Open But With Riders
Final call will be taken by local authorities; shopping complexes that draw fewer ‘outsiders’ are permitted to operate
Covid Impact Relatively Muted In India
Compared to Italy and the US, India’s rate of infection spread has been slow. This can be attributed to the strict measures in place
How Global Trade Will Fare Post-Covid
China isn’t likely to lose its pre-eminent position soon. India, for one, will need to make manufacturing globally competitive
How To Curb Harassment In The Virtual Office
Training and sensitisation are essential. Institute a strict dress code and chat etiquette to ensure professionalism during video calls
