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RBI likely to hold interest rate at monetary policy review
Mumbai, Feb 5 (IANS) With the annual retail inflation rate breaching the five per cent mark in December and going over the RBI’s median level of four per cent, the central bank is widely expected of keep its key interest rate on hold for the fourth time in succession at its final bi-monthly monetary policy review of 2017-18 slated for Wednesday.
On the other hand, there are even concerns among sections of the industry that the RBI could opt for a rate hike given the inflationary push of Budget 2018-19 last week with Finance Minister Arun Jaitley proposing higher minimum support prices for farmers in the next fiscal in the last full budget by the government before the general elections early in 2019.
“The RBI should not over-react to the high yield pressures of the bond market, along with the government promising a substantial revision in the Minimum Support Price (MSP) for farmers, and refrain from going in for any hike in the benchmark policy lending rates when the Monetary Policy Committee meets on February 7,” industry chamber Assocham said in a statement.
Presenting the Union Budget, Jaitley on February 1, announced that the MSP for notified kharif crops will be 1.5 times the input cost, and also stepped up total budgetary allocation for the sector for next fiscal by about five per cent.
At the fiscal’s penultimate policy review in December 2017, the RBI maintained the status quo on its key lending rate for the third time in succession at six per cent, citing concerns on the rising trajectory of inflation.
The Reserve Bank Of India also raised the inflation forecast for the remainder of the current fiscal to 4.3-4.7 per cent.
The continuing rise in food and fuel prices pushed India’s annual retail inflation rate over the five per cent mark in December 2017, to 5.21 per cent, from 4.88 per cent in November 2017.
Credit ratings agency Crisil said in a note that the low-base effect causing the acceleration in retail inflation from July to November 2017, faded away in December.
“Yet, CPI (consumer price index) inflation printed at a 17-month high, driven by higher inflation in housing, food (especially vegetables) and personal care and effects – factors that still warrant caution on the part of the RBI,” it said.
“Accordingly, we also expect the Monetary Policy Committee (MPC) to keep policy rates on hold for the remainder of this fiscal,” it added.
According to Vinod Nair, Lead of Research, Geojit Financial Services, higher-than-expected fiscal deficit target for fiscal 2019 of 3.3 per cent, rising inflation and yield may push RBI to be more “hawkish” on interest rates in the upcoming monetary policy review.
According to A. Prasanna Economist at ICICI Securities, “the probability of rate hikes in the next fiscal year has gone up materially”.
Kotak Institutional Equities Senior Economist Suvodeep Rakshit said: “The RBI will be cautious on risks of revenue slippages, increase in food subsidy (possibly through higher MSP) and overall expenditure quality, and possible fiscal slippages.”
“Further, higher crude prices and global macro conditions will weigh on the RBI. We expect the RBI to remain on a pause mode. However, the tone will likely be more hawkish with the probability of rate hikes in FY2019 increasing,” he added.
In the budget, Jaitley also made a significant announcement of fiscal slippage with implications for pushing inflation, revising upwards the government’s fiscal deficit target for 2017-18 to 3.5 per cent of the GDP, or the equivalent of Rs 5.95 lakh crore.
The higher target came in place of the 3.2 per cent – or Rs 5.46 lakh crore – for the current fiscal announced earlier.
While holding its repo, or the short term lending rate for commercial banks, in December 2017, the RBI said: “The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of four per cent while supporting growth.”
From the government’s perspective, sounding a clear note of caution on rising crude oil prices pushing inflation, Chief Economic Advisor (CEA) Arvind Subramanian has toned down his earlier vocal expectation of a RBI rate cut.
In an interview with a news channel following the release of the Economic Survey 2017-18 authored by him, Subramanian said that with retail inflation edging past the RBI’s median target of four per cent, the “cycle has turned”.
–IANS
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Dr. Abhishek Verma Dedicates a Shelter in Memory of His Mother, Veena Verma, at KGMU; Inaugurated by Daughter Nicolle Verma
World-renowned business tycoon Dr. Abhishek Verma has supported Foodman Vishal Singh’s Hunger-Free World mission. In memory of his mother, Late Veena Verma, who was a 3 term Rajya Sabha MP.
Dr. Verma dedicated a state-of-the-art free permanent shelter for the attendants of patients at KGMU Medical University, Lucknow, under the aegis of Vijay Shree Foundation. His daughter, Nicolle Verma, inaugurated the shelter.
During the event, Foodman Vishal Singh honored Nicolle Verma by presenting her with a memento. Mrs. Nidhi Sharma and Avantika Yadav, associated with the organization, welcomed her with garlands. Following this, Nicolle Verma distributed essential items to the attendants and also handed out fruits. She became emotional remembering her grandmother on her birth anniversary.
On this occasion, she also inaugurated the “Veena Verma Sevalaya” in memory of her grandmother, Veena Verma, to serve the attendants. She expressed, “I feel proud that my family is engaged in nation-building as well as social service. Today, in collaboration with Vijay Shree Foundation founder Foodman Vishal Singh Ji, I feel immensely proud to dedicate this shelter for the poor, helpless, and needy attendants of patients battling serious illnesses like cancer. I am honored to be associated with the Hunger-Free World Mission for humanity.”
Inspired by the continuous humanitarian service provided by Vijay Shree Foundation over the past 17 years, Nicolle Verma donated 10 lakh rupees to support the cause. The purpose of this donation is to ensure that services continue for the needy attendants of patients suffering from severe illnesses in hospitals, as facilitated by Foodman Vishal Singh.
It is noteworthy that Dr. Abhishek Verma’s family has a legacy of public and philanthropic service. They are helping millions to carry forward the values and service work of their parents. On the occasion of his mother’s birth anniversary, Dr. Abhishek Verma dedicated this state-of-the-art permanent shelter at Lucknow Medical College to serve the attendants of patients through the Vijay Shree Foundation.
Supporting Foodman Vishal Singh’s Hunger-Free World mission, Dr. Abhishek Verma assured that he would continually support keeping this flame of humanity alive. He also promised to assist in providing medicines to the helpless patients.
Continuing her grandmother’s legacy of service, Nicolle Verma personally served food to the needy patients and attendants. She said, “It is our good fortune to have received the joy of doing this noble work today through Foodman Vishal Singh. I have taken another step forward in carrying my family’s values and cooperation by joining hands with the Vijay Shree Foundation. My father taught me to serve and help the needy, and I feel happy when I bring a smile to someone’s face.”
On the birth anniversary of the late Veena Verma, the event organizer, Vijay Shree Foundation founder Foodman Vishal Singh, said, “We feel proud and happy that Dr. Abhishek Verma, a globally renowned business tycoon, has extended his support to uplift our country from the hunger index. Today, on his mother’s birth anniversary, he inaugurated a state-of-the-art permanent shelter at Lucknow Medical College, which will always be helpful for the needy attendants of patients. It is a pleasure for me and the organization to receive the affection of Mr. Verma.”
The event was attended by General Manager Verma Family Office Hemant Garg, Sonu Rajput, and the organization’s volunteers, including Sandeep Singh, Parmeshwar Ji, Prashant Rao Gautam, Balram Singh, Ramesh Chaudhary, Suman, Jeetu, Anil, Suraj, Vinay, Manish Bhadauria, Manas Mehrotra, Vivek, Apurv, Happy, and others.
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