The Reserve Bank of India's Monetary Policy Committee (RBI MPC) held the repo rate constant at 6.5 percent for the fifth day in a row on Friday. The statement was made by RBI Governor Shaktikanta Das, who stated that the decision was unanimous given the country's current economic predicament. Governor Das stated that the 4% inflation objective has yet to be met, adding, "We have to stay the course." The MPC was originally established to limit India's inflation rate at 4%.
5 significant announcements from the RBI MPC to remember:
GDP Growth Forecast
RBI Governor Shaktikanta Das revealed that the MPC has increased the GDP prediction for 2023-24 (FY24) to 7% from 6.5 percent previously. Das stated that domestic economic activity is doing nicely.
Inflation Forecast
The inflation forecast for FY24 has remained constant at 5.4 percent. Das stated that, while core inflation has been broadly falling, dangers to food inflation persist. He also stated that food inflation could cause an increase in inflation figures in November and December.
Payment Restrictions for UPI
The RBI increased the United Payments Interface (UPI) payment limitations for hospitals and educational institutions to Rs 5 lakh per transaction from Rs 1 lakh previously. Das also stated that the RBI will establish criteria for loan product online aggregators in order to increase transparency in digital lending.
Commercial Sector Expansion
According to the RBI, the buoyancy in public sector spending, above-average capacity utilization in manufacturing, and domestic demand would all contribute to growth. The entire flow of resources to the commercial sector was Rs 17.6 trillion in the current fiscal year, up from Rs 14.5 trillion the previous year.
Capex in the Public Sector
Despite sluggish external demand, exports increased in October. Rural demand, manufacturing, and service buoyancy should benefit private consumption. Das said that the robust corporate balance sheet, economic optimism, and government infrastructure expenditure will enhance public sector capex.
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