Raghuram Rajan's first monetary policy today: Can he please all?

September 20, 2013

Raghuram_Rajan

New Delhi, Sep 20: Reserve Bank governor Raghuram Rajan faces his first big test today as he delivers his maiden monetary policy. Having won universal applause for his "rupee speech", which resulted in a dramatic change in Street sentiments, there's hope that Dr Rajan will roll back some of the emergency measures, announced in July, that have been hurting Indian Inc.

Ben Bernanke's surprise decision on Wednesday not to wind down its massive monetary stimulus has come as a shot in arm for Dr Rajan as the pressure on rupee has eased considerably. However, the Fed's decision also means that expectations have risen manifold.

The biggest challenge for Dr Rajan will be to spell out a policy that is consistent with his hardline views on inflation, and also takes into consideration India' stuttering growth, which hit a decade low in the last fiscal.

With retail inflation around the double-digit mark and headline inflation at a 6-month high, Dr Rajan is unlikely to lower the benchmark repo rate, which currently stands at 7.25 per cent. He is also unlikely to tinker with the cash reserve ratio, or the portion of deposits banks have to maintain with the central bank, unchanged at 4 per cent.

"There is a change of guard, so we don't know what the flavour will be, but Rajan is likely to be hawkish and reiterate the importance of low and stable inflation for sustained economic recovery," said Rajeev Malik, senior economist at CLSA in Singapore.

A status quo would disappoint the banking industry and millions of consumers who are struggling under the burden of high Equated Monthly Installments (EMIs). With peak festival season around the corner, demand for loans is expected to go up.

"We have made our recommendations for releasing the liquidity, making it more accessible, making it less expensive," State Bank of India (SBI) Chairman Pratip Chaudhuri said.

But, economists say holding rates will be the best step for India under current circumstance.

"We expect the RBI to keep all policy rates (repo, CRR) unchanged, in line with consensus; sound hawkish on near-term inflation risks due to supply shocks emanating from food and rupee," Nomura analyst Sonal Varma said.

What Dr Rajan is expected to do is to scale back the tight liquidity measures that have helped the rupee bounce from a record low. Dr Rajan is widely expected to leave the marginal standing facility (MSF) unchanged, a Reuters poll showed. The overnight rate is generally viewed as the central bank's effective policy rate now, since it is the major interest rate tool being used to support the rupee.

The central bank jacked it up by 200 basis points in July to 10.25 per cent so that it stood 300 basis points above the official policy repo rate, aiming to tighten market liquidity and make it more expensive to speculate against the rupee.

Still, A. Prasanna, economist at ICICI Securities Primary Dealership Ltd in Mumbai, said it was a 50/50 call as to whether Rajan cuts the MSF to 9.25 per cent.

Several economists expect Dr Rajan to reverse some of the other rupee-supporting steps. He might relax a requirement that banks meet 99 per cent of their cash reserve ratio on a daily basis. The minimum was increased from 70 per cent previously, which drained liquidity from money markets but also choked off credit.

"Out-of-the-box solutions"

India Inc. is looking forward to some unconventional measures from Dr Rajan.

"We expect the new RBI governor to initiate measures that would enthuse the market participants, boost investor sentiment and bring confidence back in the economy," said Sidharth Birla, senior vice president of industry body Ficci.

Better communications:

In his first-day press conference, Dr Rajan spoke of the need for communication and a "clear framework" as to where the central bank is headed.

"We need a more comprehensive policy statement from the RBI underlining the outlook on inflation and guidance around the future of monetary policy framework, especially with regards to inflation targeting," said Gaurav Kapur, senior economist at Royal Bank of Scotland.

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Raghuram Rajan's first monetary policy today: Can he please all?

New Delhi, Sep 20: Reserve Bank governor Raghuram Rajan faces his first big test today as he delivers his maiden monetary policy. Having won universal applause for his "rupee speech", which resulted in a dramatic change in Street sentiments, there's hope that Dr Rajan will roll back some of the emergency measures, announced in July, that have been hurting Indian Inc.

Ben Bernanke's surprise decision on Wednesday not to wind down its massive monetary stimulus has come as a shot in arm for Dr Rajan as the pressure on rupee has eased considerably. However, the Fed's decision also means that expectations have risen manifold.

The biggest challenge for Dr Rajan will be to spell out a policy that is consistent with his hardline views on inflation, and also takes into consideration India' stuttering growth, which hit a decade low in the last fiscal.

With retail inflation around the double-digit mark and headline inflation at a 6-month high, Dr Rajan is unlikely to lower the benchmark repo rate, which currently stands at 7.25 per cent. He is also unlikely to tinker with the cash reserve ratio, or the portion of deposits banks have to maintain with the central bank, unchanged at 4 per cent.

"There is a change of guard, so we don't know what the flavour will be, but Rajan is likely to be hawkish and reiterate the importance of low and stable inflation for sustained economic recovery," said Rajeev Malik, senior economist at CLSA in Singapore.

A status quo would disappoint the banking industry and millions of consumers who are struggling under the burden of high Equated Monthly Installments (EMIs). With peak festival season around the corner, demand for loans is expected to go up.

"We have made our recommendations for releasing the liquidity, making it more accessible, making it less expensive," State Bank of India (SBI) Chairman Pratip Chaudhuri said.

But, economists say holding rates will be the best step for India under current circumstance.

"We expect the RBI to keep all policy rates (repo, CRR) unchanged, in line with consensus; sound hawkish on near-term inflation risks due to supply shocks emanating from food and rupee," Nomura analyst Sonal Varma said.

What Dr Rajan is expected to do is to scale back the tight liquidity measures that have helped the rupee bounce from a record low. Dr Rajan is widely expected to leave the marginal standing facility (MSF) unchanged, a Reuters poll showed. The overnight rate is generally viewed as the central bank's effective policy rate now, since it is the major interest rate tool being used to support the rupee.

The central bank jacked it up by 200 basis points in July to 10.25 per cent so that it stood 300 basis points above the official policy repo rate, aiming to tighten market liquidity and make it more expensive to speculate against the rupee.

Still, A. Prasanna, economist at ICICI Securities Primary Dealership Ltd in Mumbai, said it was a 50/50 call as to whether Rajan cuts the MSF to 9.25 per cent.

Several economists expect Dr Rajan to reverse some of the other rupee-supporting steps. He might relax a requirement that banks meet 99 per cent of their cash reserve ratio on a daily basis. The minimum was increased from 70 per cent previously, which drained liquidity from money markets but also choked off credit.

"Out-of-the-box solutions"

India Inc. is looking forward to some unconventional measures from Dr Rajan.

"We expect the new RBI governor to initiate measures that would enthuse the market participants, boost investor sentiment and bring confidence back in the economy," said Sidharth Birla, senior vice president of industry body Ficci.

Better communications:

In his first-day press conference, Dr Rajan spoke of the need for communication and a "clear framework" as to where the central bank is headed.

"We need a more comprehensive policy statement from the RBI underlining the outlook on inflation and guidance around the future of monetary policy framework, especially with regards to inflation targeting," said Gaurav Kapur, senior economist at Royal Bank of Scotland.

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News Network
February 21,2020

Patna, Feb 21: The country is paying the price for failure to send Muslims to Pakistan and bring Hindus to India after the Islamic state came into being at the time of Independence, Union minister Giriraj Singh has said, triggering a fresh controversy.

The BJP leader made the remark in Purnea district in the Seemanchal region of Bihar which has a sizeable Muslim population and where the Begusarai MP was canvassing in favor of the Citizenship (Amendment) Act.

Highlighting the need for such a legislation, he told reporters late Thursday "when our forefathers were fighting for Independence from British rule, Jinnah was pushing for the creation of an Islamic state".

"Our forefathers, however, committed a mistake. Had they ensured that all our Muslim brothers were sent to Pakistan and Hindus brought here, the need for such a move (CAA) would not have arisen. This did not happen and we have paid a heavy price for it," the outspoken BJP leader said.

The CAA, which seeks to fast-track granting citizenship to non-Muslim refugees from Pakistan, Bangladesh and Afghanistan who might have fled their home countries because of religious persecution, has become a major bone of contention since it is feared that a country-wide National Register for Citizens (NRC) may follow.

The Narendra Modi government, which had formerly hinted that a country-wide NRC was on the anvil, seems to have put it on the backburner though a section of citizens across the country, especially Muslims, have been organizing protests out of fear that, if implemented, the NRC may result in a large number of people becoming stateless.

Singh has often been in the crosshairs of the opposition for placing his foot in the mouth. This time, however, his words were frowned upon even by NDA ally Lok Janshakti Party, founded by his cabinet colleague Ram Vilas Paswan and now headed by his son Chirag Paswan.

The young LJP chief, who kicked off a state-wide "Bihar First-Bihari First" yatra here Friday morning, to project the NDAs progressive face ahead of the assembly polls due later this year, expressed strong disapproval of Singh's utterance and noted the coalition had to suffer in the Delhi polls because of "divisive" remarks by BJP leaders.

"We are an NDA constituent but many times our coalition partners say things which the LJP does not at all agree with. This one (Giriraj Singhs statement) is such an example. Had a person of my party spoken in this fashion, I would have taken responsibility and acted," Paswan said.

He said he had placed his view repeatedly on record that the coalition had to suffer on account of divisive remarks, Paswan said in apparent reference to inflammatory speeches by BJP leaders like Union minister Anurag Thakur and BJP MP Parvesh Verma, among others.

"The people of Delhi voted on the basis of performance. We wish they do so again in Bihar and real issues don't get drowned in political cacophony.

"The Nitish Kumar government has accomplished a lot, though much more needs to be achieved. We wish to reach out to people with our vision for the future, said Paswan, before he embarked on the yatra on a customized bus decorated like a chariot in front of which he offered prayers and smashed a coconut.

Meanwhile, Giriraj Singh who loves to wear his Hindu nationalism on the sleeves was busy joining issue with Asaduddin Owaisi's AIMIM which has been under attack for controversial remarks by its leader Waris Pathan.

Sharing video of an old speech by Owaisis brother Akbaruddin which had landed him in jail, besides Pathan's recent remark, Singh asked the opposition RJD-Congress combine in Bihar and the "tukde tukde gang" whether they wanted to "convert India into Pakistan".

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News Network
April 13,2020

Apr 13: The Supreme Court of India has said Indian expatriates stranded abroad cannot be flown back immediately. All petitions before India's apex court which sought directions or orders to 'bring back Indians stranded in various countries abroad' has been deferred for four weeks, according to Indian media reports.

The Chief Justice of India Sharad Arvind Bobde led bench took up matters pertaining to evacuation of Indian citizens stranded abroad amid the Covid19 pandemic.
Supreme Court today deferred for 4 weeks, all the petitions before it which sought directions or orders to 'bring back Indians stranded in various countries abroad'.

A total of seven petitions seeking directions from Court on the immediate evacuation of Indian nationals from UK, US, Iran and Gulf countries were taken up simultaneously.

Bobde said, "Stay where you are. People in other countries cannot be brought back right now"

Foreigners stuck in India granted visa extension

Furthermore, the Indian Ministry of Home Affairs (MHA) has announced a visa extension for all foreigners who are stranded in in India due to ongoing travel restrictions imposed by the government.

Regular visa,e-visa or stay stipulation of such foreigners stranded in India due to travel restrictions by Indian Authorities&whose visas have expired/would be expiring between 01.02&30.04, would be extended till 30 April on gratis basis,after online application by foreigners:MHA

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News Network
January 22,2020

Jan 22: India's ranking in the latest global Democracy Index has dropped 10 places to the 51st spot out of 167 owing to violent protests and threats to civil liberties challenging freedoms across the country.

Prime Minister Narendra Modi's government has been criticized by rights groups and western governments after shutting off the internet and mobile phone networks and detaining opposition politicians in Kashmir.

Modi’s government has also responded harshly to ongoing protests against a controversial, religion-based citizenship law. Muslims have said their neighborhoods have been targeted, while the central government has attempted to ban protests and urged TV news channels not to broadcast “anti-national” content. Some leaders in Modi’s ruling party called for “revenge” against protesters. India’s score in 2019 was its worst ranking since the EIU’s records began in 2006, and has fallen gradually since Modi was elected in 2014.

The Economist Intelligence Unit’s 2019 Democracy Index, which provides an annual comparative analysis of political systems across 165 countries and two territories, said the past year was the bleakest for democracies since the research firm began compiling the list in 2006.

“The 2019 result is even worse than that recorded in 2010, in the wake of the global economic and financial crisis,” the research group said in releasing the report on Wednesday.

The average global score slipped to 5.44 out of a possible 10 -- from 5.48 in 2018 -- driven mainly by “sharp regressions” in Latin America, Sub-Saharan Africa, the Middle East and North Africa. Apart from coup-prone Thailand, which improved its score after holding an election last year, there were also notable declines in Asia after a tumultuous period of protests and new measures restricting freedom across the region’s democracies.

Asia Declines

Hong Kong, meanwhile, fell three places to rank 75th out of 167 as more than seven months of violent and disruptive protests rocked the Asian financial hub. An aggressive police response early in the unrest, when protests were mostly peaceful, led to a “marked decline in confidence in government -- the main factor behind the decline in the territory’s score in our 2019 index,” the group said.

In Singapore, which ranked alongside Hong Kong at 75th, a new “fake news” law led to a deteriorating score on civil liberties.

“The government claims that the law was enacted simply to prevent the dissemination of false news, but it threatens freedom of expression in Singapore, as it can be used to curtail political debate and silence critics of the government,” EIU analysts said.

China’s score fell to just 2.26 in the EIU’s ranking, placing it near the bottom of the list at 153, as discrimination against minorities, repression and surveillance of the population intensified. Still, in China “the majority of the population is unconvinced that democracy would benefit the economy, and support for democratic ideals is absent,” the EIU said.

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