RBI Governor Sanjay Malhotra | Photo credit: Shasank Parade
The six members of the RBI Rate Establishment Panel reached a double note in their recent meeting due to the possibility that the global tariff war that affects the growth perspectives of India, even when the perspectives of retail inflation have become Bey in Wedsedes of Meeting.
This led to the members of the Monetary Policy Committee (MPC) to unanimously vote the voting points (BPS) Repo rate (from 6.25 percent to 6 percent) and change the monetary policy posture to “accommodation” in your meeting 7Th to 9Th. This rate cut occurred at the back of the 25 BPS reduction at the February MPC meeting.
The governor of RBI, Sanjay Malhotra, emphasized that when the inflation of the consumer price is decisively around its target rate of 4.0 percent and growth remains moderation and recovery, monetary policy needs to promote national impulses to advances. This is special, so in the midst of an uncertain global environment, which has amplified the downward risks for growth.
“This will strengthen private consumption and support a rebirth in private corporate investment activity. In the future, taking into account the growth paths in evolution inflation, monetary policy must be facomodive,” said Malhotra.
The vice governor M Rajashwar Rao observed that the strong rural demand for the brilliant perspectives of agriculture along with the improvement of urban demand, and a resistant services sector is a good omen for growth perspectives. However, winds against global represent the downward risk for growth. Uncertainties are still high.
“When evaluating the general situation, we find that, although the inflation perspective remains benign, GDP growth could face a low pressure. Recent waves of global uncertainty demand decisive political support for growth.” Hey said.
Inflation enters a decisive softening phase
The executive director Rajiv Ranjan, executive director, emphasized that inflation has entered a decisive softening phase with growth risks that exceed those of inflation.
“On inflation, there seems to be a greater conviction of inflation requested aligned with the duration of the 4 percent objective in the current financial year … In general, considerable progress achieved in the Disinflation Front has adhered to Laticy to growth growth.
“In equilibrium, although growth remains reasonable, it is lower than our aspirations and policy impulse needs in the midst of a challenging global environment … We need to continue concentrating a greater weight weight in our policy environment amid Washree Wasigns.”
Nagegh Kumar, director and executive director of the Institute for Industrial Development Studies, Nueva Delhi, said that given the need to support growth through private consumption and investment, the MPC must continue with a higher rate cut.
“One could be more ambitious and point to a 50 basic points cut, which in my opinion can be more effective than two cuts of 25 basic points each.
“However, given the global uncertainty, we can do it cautiously gradually. We need to continue vigilantes with respect to the evolving global scenario and its impact on the growth perspective of India,” he said.
Politics relieving the “good news”
The economist Saugata Bhattacharya, based in Mumbai, said that the moderate progniative inflation route (RBI predicts an average inflation of 4 percent of the CPI in the fiscal year26) opens more space for the flexibility of “good news” policies.
Moreover, the current resilience of economic activity still does not require additional actions of “bad news” associated with the prospects for a significant deceleration of growth. RBI’s liquuidity infusion will also transmit relevant interest rates.
While competing with the change of posture, he pointed out that he does not provide guidance of a preceding policy ease route.
RAM Singh, director of the School of Economics of Delhi, observed that with growth below the potential and a benign inflation perspective, the MPC should support growth by reducing the rest rate.
In addition, there is a solid case to change the position to accommodation as a sign of political guidance for the short term.
“For an effective and fast transmission of interest rate cuts and consistent with a changed position, the RBI liquidity management tool must be oriented to thesis changes,” he said.
In particular, monitoring of liquuidity conditions to take appropriate measures to ensure that adequate liquuidity is highlighted to the transmission of speed cuts.
Posted on April 23, 2025