The Reserve Bank of India justified its decision to pause its policy rate action by maintaining the repo rate at 5.15 per cent. This was not in line with the market consensus which expected a 25 bps (one bps is 0.01 per cent) reduction of the benchmark policy repo rate by the central bank. Spike in inflation was one of the main reasons for not doing so.
After reaching a 26-quarter low in the second quarter of FY’20, the economy is expected to pick up pace third quarter onwards.
“We expect that the slowdown episode that began in January 2018, to end soon, in response to better global growth, easier domestic financial conditions, positive fiscal impulse, some uplift in sentiment, and an easing of supply bottlenecks” said Prachi Mishra, India economist for Goldman Sachs.
An analysis of the second quarter financial results of 609 companies in the Indian corporate sector (excluding financial sector entities) by Icra showed a year-on-year (y-o-y) and sequential contraction in revenues for the first time in almost four years. Aggregate revenues contracted by 0.9% on a y-o-y basis.
The veteran policy advisor said that though GST was introduced in a record time, the next level would be to simplify the structure and minimise the cost compliance.
The central bank is in the process of setting up a college of Supervisors, in addition to an internal supervisory research and analysis wing. The move is significant in the wake of criticism that the central bank received for not anticipating the crisis at the co-operative bank- PMC Bank. The RBI is working with the Govt to amend the Act governing co-operative banks.
Of the 2,542 cases admitted under IBC till date, 1,497 CIRPs or 59% of cases are still in court.
Icra has forecast that non-food credit growth will slow down to 8 to 8.5 per cent during FY'20.
The organisation rejig is expected to improve financial conglomerates' supervision.
Gold value in reserves changing more frequently since central bank accepted Jalan panel report.
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