RBI holding repo rate bodes well for savings: Economists | WeForNews | Latest News, Blogs RBI holding repo rate bodes well for savings: Economists – WeForNews | Latest News, Blogs
Connect with us

Blog

RBI holding repo rate bodes well for savings: Economists

Published

on

Reserve Bank of India RBI

New Delhi, Dec 6 : Even as many see the RBI’s pause on repo rate as a setback for the growth, some economists argue that any further cut could have affected households savings which have already seen a decline in recent times.

“Reduction in interest rate will work negatively. The interest rate is like a double-edged sword. It will have an impact on savings and it will have an impact on investments. We know very clearly that it does not have much impact on investments. Now, what is it doing? It is basically hampering the savings,” said N.R. Bhanumurthy of the National Institute of Public Finance and Policy (NIPFP).

He also said that monetary policy is not just about interest rates.

“There are many things which monetary policy does. It can ensure that credit flow is better and the banking sector is in good shape. They can create money supply. So, it can do many things. They have to now see how savings could be improved,” the NIPFP professor said.

M. Govinda Rao, Chief Economic Advisor, Brickwork Ratings, said that transmission of the reduction in the policy (repo rate) requires the lending rates to fall. Further, that would also require the deposit rates to fall, which could result in reduced saving by households.

“When the inflation rate is perking up, if the banks also reduce the deposit rates, the rate of return on savings will decline which could not only reduce the incentive to save but also can hurt the elderly who maintain themselves from the interest income,” he said.

As per Economic Survey of FY19, gross savings fell nearly 60 basis points as a share of GDP in two years to 30.5 per cent in 2017-18. Household savings led the decline as its share contracted from as high as 23.6 per cent of GDP in 2011-12 to 17.2 per cent of GDP in 2017-18.

“The household sector savings declined from 23.6 per cent of GDP in 2011-12 to 17.2 per cent in 2017-18 and its net financial savings and a ratio of GDP declined from 7.2 per cent to 6.5 per cent during the same period. Thus, besides inflationary expectations, ensuring adequate real rate of return on the savings could be an objective of keeping the repo rate constant,” Govinda Rao said.

As against market expectations of a rate cut, the RBI on Thursday maintained the policy repo rate at 5.15 per cent. With this, the reverse repo rate also stands unchanged at 4.9 per cent. The Monetary Policy Committee (MPC) was unanimous in its decision to maintain status quo on both rates and ‘accommodative’ stance.

(Nirbhay Kumar can be contacted at [email protected])

Blog

Is China suppressing the corona virus infections!

American cities are on high alert as two coronavirus cases are confirmed in Chicago and Washington while 1,000 Americans have been told to evacuate Ground Zero in Wuhan.

Published

on

By

Coronavirus

New Delhi, Jan 27: China is facing accusations from the world community of suppressing and playing down the coronavirus outbreak and the scale of infections which some reports say now I as high as 90,000 while the official Beijing figure is just 1,975.

International media reports have said cited a nurse treating coronavirus sufferers in China who claims 90,000 people have already been infected.

A nurse wearing a protective suit and face mask treating the sick in Wuhan has claimed that 90,000 people have already been infected by the coronavirus. However, the nurse’s report has been viewed almost two million times on YouTube. In the footage, she warns people not to go outside and to refrain from celebrating the Chinese New Year.

The animal virus epidemic originated in China, where it has infected more than 1,970 people and killed 56, and has spread worldwide.

International critics are saying that the China is censoring the numbers and sanitising videos from the internet. China’s President Xi Jinping has already warned of ‘grave situation’ as killer coronavirus accelerates.

American cities are on high alert as two coronavirus cases are confirmed in Chicago and Washington while 1,000 Americans have been told to evacuate Ground Zero in Wuhan.

Canadian authorities on Saturday confirmed the first case of coronavirus – a man in his 50s from Toronto.

The countries which have reported these cases include Singapore, Malaysaia, South Korea, Japan, Vietnam, Australia, Nepal, France, Canada, the US, Thailand, Taiwan, Hong Kong and Macau.

But the Global Times revealed that vital resources, including masks and goggles, were urgently needed. The accusations of a cover-up echo the furore surrounding the SARS (severe acute respiratory syndrome) epidemic in 2002 when the government concealed the existence of the illness not just from the outside world but from its own people.

Hong Kong leader Carrie Lam on Saturday declared a virus emergency in the city of 7.3 million, extending school cancellations until February 17 and cancelling all official visits to mainland China.

China has quarantined three cities in an effort to contain the spread of the coronavirus — encompassing a total population of some 35 million people.

Other reports say several cities are under lockdown with a combined population of 47 million including Wuhan, Huanggang, Ezhou, Chibi, Jingzhou, Zhijiang, Qianjiang, Xiantao, Xianning, Huangshi, Dangyang, Enshi, Xiaogan. Jingmen and Shantou.

Reports say that Wuhan continues to be under complete lockdown. Police have been stationed at the borders of Wuhan to block the roads preventing any sort of movement into the quarantined city. The city’s pharmacies have been swamped by people wanting to stock up on medicines.

Continue Reading

Blog

Budget, Coronavirus to be key monitorables next week

Published

on

By

Stock Market Down

Mumbai, Jan 26 : The upcoming six-day trading week will keep investors on their toes due to the mega event of presentation of the Union Budget on Saturday. Much of the trading will also depend on the impact of the coronavirus outbreak, which has killed 56 people in China and dimmed the mood of investors globally.

Investors will take their cues most from the fiscal deficit target that the government sets for the next financial year. Amid tax collections falling below target, analysts say that the markets have already priced in the fiscal deficit to breach the target for the current year set at 3.3 per cent of the GDP.

Anindya Banerjee of Kotak Securities said: “Fear of fiscal slippage in the Union Budget has caused an outflow nearly 1.6 billion from the debt market over the past 3 weeks.”

At the same time, relentless intervention from the central bank has not allowed the rupee to appreciate as much as its peers in Asia. These are the major reasons why the rupee has become one of the weakest currencies in Asia, Banerjee added.

While the Economic survey report on Friday will provide further evidence on the extent of economic slowdown in India, expected measures to kickstart the economy in the Union Budget will provide direction to the equity markets, experts say.

Besides, investors will keep an eye during the upcoming week on the quarterly numbers of heavyweights like HDFC, Maruti Suzuki, the Bajaj twins, Bharti Airtel, SBI, ITC, Power Grid, HUL and Tech Mahindra.

Vinod Niar of Geojit Financial Service said that the market direction will depend on the actual budget announcements and the third quarters results, and that the broad market is still very solid in expectation of re-rating of valuations.

“The Q3 result had solid expectations but actual results are marginally below expectation for sectors like IT and banks, leading to cautiousness in the market. We feel that this cautious trend will be maintained in the near-term,” Nair said.

The Indian stock markets will be open for normal trading on February 1, which is a Saturday, when the Union Budget is presented to the Parliament by Finance Minister Nirmala Sitharaman.

(Ravi Dutta Mishra can be contacted at [email protected])

Continue Reading

Blog

Bhima Koregaon Case: Tussle brews between Maharashtra, Centre

Published

on

By

Bhima-Koregaon violence

A day after Nationalist Congress Party President Sharad Pawar raised serious doubts over the 2018 Elgar Parishad/Koregaon-Bhima investigations, the Centre swiftly moved against the Maha Vikas Aghadi government and transferred the probe into the case to the National Investigation Agency (NIA).

Crying foul, the NCP-Congress attacked the Bharatiya Janata Party-led Central government “for exceeding its brief for sheer political reasons” over the issue.

A piqued Pawar accused the BJP of harbouring “an acute fear” of being disrobed in the Koregaon-Bhima-Elgar Parishad case and chose to post-haste hand it over to the NIA.

He reiterated his demand for a Special Investigation Team (SIT) to conduct an in-depth independent investigation to “unravel the truth” over the Pune Police’s probe into the case.

“Prima facie, it seems they (Pune Police) misused their power. The NIA may have taken over the probe, but it is necessary for the state government to investigate lapses by Pune Police or whether they misused powers to frame the activists,” Pawar said.

Locking horns with the Centre, he said the fresh probe was necessary as the move to hand over the case to NIA has “aroused suspicions”, and it may have apprehended that the re-investigation could expose the former BJP state government and its hand-picked officials in the matter.

“In no way can it be said that all those who take up cudgels against injustice and atrocities by the government are naxalites, as in this case,” Pawar pointed out.

Interestingly, the Centre’s abrupt move came a day after Pawar wrote to Chief Minister Uddhav Thackeray and hours after Deputy CM Ajit Pawar on Friday held a meeting to review the case status and charge-sheets filed by Pune Police.

State Home Minister (NCP) Anil Deshmukh slammed the Centre saying they were scared of a fresh probe contemplated by the MVA government as it could nail the previous BJP-led regime for messing up the original investigations.

“We shall seek legal opinion in the matter before launching a fresh investigation,” said Deshmukh.

Congress leader Rahul Gandhi attacked the move saying it was part of “MOSH (Modi-Shah) agenda of hate”.

“Anyone who opposed the MOSH agenda of hate is an ‘Urban Naxal’. Koregaon-Bhima is a symbol of resistance that the government’s NIA stooges can never erase,” Gandhi said in a sharp tweet.

Pawar had questioned the manner in which Pune Police probed it and claimed that the previous BJP-regime had “vengefully” implicated several Dalit and rights activists in the Elgar Parishad-Koregaon-Bhima cases, based on “trumped up” charges.

After the MVA government of Shiv Sena-Nationalist Congress Party-Congress took office on Nov. 28, there was a change in perception of the cases lodged during the previous government.

Nevertheless, caught unawares by the Centre’s move, shortly before midnight on Friday, Deshmukh condemned the decision “to transfer the probe to NIA without any consent of the Maharashtra government.”

The NCP-Congress appear firm on setting up an SIT to re-look at the high-profile and sensitive case which could bring out skeletons of the former BJP-regime and its investigators, prompting the Centre to hastily shift it to NIA.

Pawar contended that many prominent personalities and legal luminaries such as former Supreme Court Judge P.B. Sawant, former Bombay High Court Judge B.G. Kolse-Patil and others have raised objections to the manner in which the case was probed by Pune Police in which activists were arrested from different parts of India and branded ‘urban Naxals’.

The NCP chief pointed out that the then CM Fadnavis had not described those arrested activists as ‘urban Naxals’ and emphasised that the cases registered against them are not based on facts.

On Dec. 31, 2017, a large Elgar Parishad was organised in Pune’s Shaniwar Wada which was addressed by top leaders of Lefits, social and Dalit intellectual, the Kabir Kala Manch, the banned CPI (Maoist), its frontal organisations and others which allegedly triggered the violence the next day in Koregaon-Bhima.

On Jan. 1, 2018, caste riots erupted when over 100,000 Dalits converged to celebrate the historic Jan. 1, 1818 victory of a small 800-strong force of the Mahar caste of the Bombay Native Infantry of the British East India Company over a battalion of the huge 28,000-strong army of the Peshwa Bajirao II in Koregaon-Bhima after a 12-hour battle.

The two incidents proved to be a watershed in the state’s recent political history and a chasm developed as the then BJP-led government went hammer-and-tongs after the Leftist groups and their leaders.

Later during June and August 2018, many prominent Dalit and Leftist activists and intellectuals were arrested in a nationwide swoop by Pune Police.

They included: Sudhir Dhawale, Rona Wilson, Surendra Gadling, Shoma Sen and Mahesh Raut — all nabbed in June 2018 — and charged with links to Maoist groups.

Subsequently in August 2018, Pune Police arrested P. Varavara Rao, Sudha Bharadwaj, Vernon Gonsalves and Arun Ferreira and Gautam Navlakha on similar charges, besides naming others such as Milind Teltumbde, Rituparn Goswami, Prashanto Bose, as “underground, absconded and wanted accused” in the case.

It was the Pune Police’s contention that these persons/groups supported, funded and organized the Elgar Parishad as part of a larger conspiracy to create social and political unrest in the country, assassinate Prime Minister Narendra Modi, wage a war against the country and overthrow the democratically-elected government.

(Quaid Najmi can be contacted at [email protected])

Continue Reading
Advertisement

Most Popular