Art & Culture
- Right to access internet is fundamental right declares Kerala High Court
- Legal rights of Deities in India, Difference in Natural and Juristic Person
- Bru refugees refuse to return to Mizoram
- No animal sacrifice in Tripura temple-Orders High Court
- EC’s Order on Reducing Sikkim CM’s Disqualification Period
- Law Ministry issues corrigendum to Jammu and Kashmir Reorganisation Act
- Appointment of the Judges in India.
- New Chief Justice of India- How is CJI appointed?
- Indian Penal Code 1860, HM Amit Shah wants to Overhaul IPC
- National Population Register (NPR) 2020
- Whistle Blowers Allegations on Infosys
Governance & Social Justice
- 60% girls in Delhi colleges anaemic
- Niti aayog’s School education quality index
- Multipurpose National Identity Card
- Population pyramid : India Vs China, Demographic dividend Phase of India
- UN Population Report, India will become the most populous country by 2027
- Supreme Court upholds SC and ST (Prevention of Atrocities) Amendments Act
- Comparing Population Pyramids of India and China
- Waqf boards-Their governance and purpose
- Harvard Admissions Case
- Pradhan Mantri Jan Arogya Yojana- Ist Anniversary, Problems and solutions
- Significance of sexual and Reproductive Health-Status of reproductive services in India
- Pregnancy in Old Age, What is In Vitro Fertilisation-Risks and legal shortcomings
- Supreme Court Judgement on NGOs and RTI
- Social Stock Exchange
- Rajasthan Govt changes EWS norms, Sets Rs 8 lakh family income as only criteria
- Global hunger index 2019
- No Government job for those with more than two kids
- Ranitidine CANCER risk
- IIT Council Introduces Tenure track system
- Bangladesh growing faster than India ?
- Cyprus dispute explained
- Donald Trump impeachment
- India wins Hyderabad Nizam case against Pakistan
- India’s reply to Pakistan at UNGA
- Prime Minister of Malaysia calls India and invader in Kashmir
- Should India recognise the armenian genocide ?
- Why are CARICOM countries important for India ?
- Why are countries leaving OPEC ?
- Attacks on Saudi Oil facilities
- Organization of Islamic Cooperation issues statement on Jammu and Kashmir
- Sri Lanka’s relations with India & China
- US troops start pullout in Syria as Turkey prepares for operation
- What are Vanilla Islands?
- India-USA trade deal
- UNHCR Nansen Refugee Award-2019
- Modi – Xi Informal meet at Mamallapuram – Historic Chinese links
- India China informal summit in Tamil nadu
- Pakistan save from FATF blacklist till 2020
- USA blacklists China organisations over Uighur Muslim abuse
- Why is Chile burning ?
- Why is the Philippines important for India
- Xi jinping Nepal visit 2019 and impact on India
- India Pakistan Cross LOC Trade suspended, Should India revoke suspension?
- Protests in Lebanon
- Chennai to Vladivostok Sea Route
- End of baghdadi
- Indian government’s security advisory
- Indians no longer require Visa to visit Brazil
- Non Aligned Movement 2019 summit
- US backed Ceasefire between Turkey and Kurds
- Pakistan stops postal exchange with India
- China’s GDP growth slows to 6% slowest in 27 years
- Common Goods for Health project by WHO
- Turkey attack Kurds in Syria
- Behavioural Aspect of Farmer Suicide
- Is rural India really open defecation free ?
- Global Growth Slow Down
- Nobel Prize in Economics 2019
- Regional Comprehensive Economic Partnership
- SBI wrote off bad loans worth 76,000 crores
- Surge in Onion Price
- Agriculture Credit by RBI’s Internal Working Group
- What is Debt to GDP Ratio?
- Yes Bank Crisis
- Nobel prize in Literature – Controversy
- Boosting Indian Exports
- Sopore Fruit Mandi deserted
- What is Pink Collarisation?
- Mizoram to have Broad Gauge railway line by 2021
- Demand downturn in Indian Economy
- Payment facilitation fund
- Participatory Guarantee Scheme
- RBI’s 4th Bi-monthly Monetary Policy 2019-20
- Tourism restrictions lifted in Kashmir
- Link between Jobs, Farming, and Climate
- Draft Social Security Code 2019
- State Tax Revenues, SGST and Central Tax Devolution are likely to fall short
- Competitiveness Index 2019 by World Economic Forum
- NITI Aayog’s Water Resources Strategy
- BSNL and MTNL financial issues-DoT prepares Rs 74000 crore revival plan
- 20th Livestock Census
- India falls 10 ranks in World economic forum’s Global competitiveness index
- RBI stops Printing Rs 2000 Notes
- What is the Unified Approach proposal of OECD?
- FCI granaries overflowing
- India’s Economic Growth 2019
- Financial Sector Scams in India
- Labour Market of India
- New Strategic Disinvestment Process
- Payment Delays to Sugarcane Farmers
- Why India’s IMF Quota is not increased
- What is monetary policy Transmission? Why banks are not reducing interest
- Mahatma Gandhi’s theory of Economics
- India moves up 14 spots to 63 on world Bank ease of doing business index
- New amendments to the Motor Vehicles Act
- Power Sector Scenario in India
- Telecos to Pay Rs 96,642 crore to the Government
- Camel population declines in Rajasthan
- Merger of BSNL and MTNL
- World bank on Indian economy
Defence & Security
- Nagas Kukis Conflict, What is the cause of the latest tensions?
- Case against 50 Celebrities controversy
- Can Indian Government intercept WhatsApp?
- UP Government fires 25000 home guards, Is Yogi Government’s decision justified?
- NCRB’s Crime in India 2017 report
- Aadhaar Social Media mandatory linking case
- What is TechSagar? National repository of India’s cyber tech capabilities.
Science & Technology
- ISRO’S Project NETRA
- Facebook’s LIBRA Currency in trouble
- WHO launches first World report on Vision
- 2019 Nobel prize in physics
- 2019 Nobel prize in Physiology and Medicine
- Elon musk’s starlink project
- NASA’s ICON mission
- New King of the Moons in the Solar system is Saturn
- What Is Spectroscopy ?
- Quantum supremacy
- Climate Vulnerable Mapping Of India
- C40 Cities
- Gujarat Unveils emission trading scheme
- Forest Plus 2.0
- Himalayan States seeks Green Bonus
- India to Phase Out Single Use Plastic (SUP) by 2022
- Role of Volcanoes in Global Warming
- NH 766 ban controversy, Protests in Kerala against night traffic ban on the forest stretch
- Climate Change needs Global Solution
- Aarey Forest -2185 trees to be cut for Mumbai metro
- Government to build 1400 km long Green wall
- Graded Response Action Plan in Delhi
- Aerosol formation brightening clouds
- Anthrax outbreak in Pobitora Wildlife Sanctuary, Two affected buffaloes died
- Species in News from June to October 2019
- Climate Action Summit 2019
Tag:GS-3||Economy|| Banking & Financial Sector||RBI
Why in news?
- The RBI repo rate is reduced by 25 bps to 5.15%, the lowest since March 2010.
- For the fifth time of the year, the Reserve Bank of India’s Monetary Policy Committee (MPC) cut main repo rates as it seeks to improve demand and private consumption amid an economic slowdown.
- The central bank has also reduced the GDP growth outlook for 2019-20 to 1 percent from 6.9 percent in the previous bi-monthly MPC meeting
Key decisions and observations
- Accommodative stance
- The comment by RBI Governor Shaktikanta Das indicated a change from’ neutral’ to ‘accommodative.’
- An’ accommodative ‘ place eradicates the risk of unexpectedly returning to a rate hike.
- This also suggests a greater likelihood of further reductions in the months to come if inflation remained below tolerable limits.
- Growth rate
- GDP growth forecast lowered for current fiscal to 1% from 6.9%.
- The GDP outlook for the year 2020-21 has been revised to 7.2 percent.
- Fiscal deficit
- Government stimulus measures to help strengthen private consumption and spur investments thus reducing the fiscal deficit.
- Repo rate cut
- It is the benchmark interest rate based on which RBI will increase or decrease the money supply in an economy.
- It is charged by RBI on the commercial banks for short term borrowings and when the repo rate increases so commercial banks will borrow less and vice versa.
- Ensuring systemic liquidity seems to remain a key priority for the central bank.
- Across the globe, the major central banks are reducing the repo rates.E.g; US Federal bank
- Digital Transactions
- The RBI has decided to do away with its charges on RTGS/NEFT (Real Time Gross Settlement System/National Electronic Funds Transfer) transactions and will be made round the clock.
- This is welcome provided it can ensure that banks pass on the benefit to customers.
- Punjab & Maharashtra Cooperative Bank (PMC) crises
- RBI has put a cap on the withdraws from the PMC as Rs 1000.
- The reason being the improper maintenance of the books of accounts of the PMC.
- The RBI has highlighted that once such an incident cannot be used to generalize the health of the cooperative banks.
- All members of the MPC voted to reduce the repo rateof the system and to maintain the accommodative stance of monetary policy.
- The MPC is made up of six members — three nominated by the Union government and three representing the RBI). The MPC meets every two months to review the monetary policy stance of the RBI.
- Based on Inflation rates
- The MPC is mandated by law to ensure that retail inflation stays within a band of two percentage points of the target inflation rate of 4%.
- Since inflation has been well below the 4% mark, the MPC members have found it logical to repeatedly vote for rate cuts since February.
- Money supply increases when inflation is high so RBI increases the Repo rate to control inflation and does vice versa to increase the inflation.
Impact of the Rate cut
- After the announcement, bond prices dropped and the 10-year yield rose by 80 basis points.
- A decrease in interest rates is beneficial for debt-charged businesses (as it decreases interest costs). The cost of the fund will be lowered for both banks and NBFCs.
- The EMIs (equivalent monthly installments) of lenders are expected to be reduced. In turn, obtaining new loans would be easier.
- Due to a downturn in demand, the auto industry has substantially underperformed the benchmark index over the past few months.
- Some relief would, therefore, be provided by a reduction in the repo rate, while at the same time improving the volume trajectory of rural market players.
- As a result of the cut, companies may be able to borrow at a cheaper rate, resulting in cheaper goods, thereby benefiting the customer.
- Traders will remain apprehensive of more than currently planned government borrowing.
- Given the dovish of the plan, experts predict that interest rates can still be lowered.
- There is a possibility of another 15 to 30bps further cut
- It remains to be seen if such supply-side measures will help achieve the objective of economic recovery.
- The need of the hour is to revive the economy. With regard to future policies, the weak domestic demand conditions and the restricted inflation oath certainly offer space for further change.
Mains model question
- The minutes of the Monetary Policy Committee reveal how its six members read the state of the economy. But is a repo rate cut enough, and how will linking repo rate to lending and deposits rates impact people.