RBI Governor Raghuram Rajan led Reserve Bank of India (RBI), in its monetary policy review, on December 1, 2015 had left the key interest rate unchanged following rise in retail inflation. Here are top 5 highlights from the RBI’s monetary policy review:
1) RBI kept the key policy rate unchanged. The repo rate at which the central bank lends to the system will continue at 6.75 per cent. The cash reserve ratio (CRR) or the amount of deposits banks park with RBI has also been unchanged at 4 per cent.
2) RBI, which is set to achieve its target of getting inflation down at 6 per cent by January and is aiming to reduce the number further to 5 per cent by March 2017.
3) The RBI noted that second-quarter GDP numbers indicated early signs of recovery, he chose to stick to the earlier projection of 7.4 per cent for the fiscal with a marginal downward bias.
4) Raghuram Rajan said that while there are areas of robust growth in manufacturing such as capital goods and passenger cars, weak rural and external demand holds back stronger overall economic growth. Not all indicators, are positive. While urban consumption is showing signs of a pick-up in some areas such as passenger vehicles sales, rural demand has been weakened by two consecutive deficient monsoons and slowing construction activity.
5) Rajan also said the outlook for agriculture is subdued, in view of both rabi and kharif prospects being hit by monsoon vagaries. Overall, the current outlook for agricultural growth in 2015-16 appears moderate at best at this juncture.