SANJAY THAPA
Given the rising Covid cases, the RBI Governor Shaktikanta Das-headed rate-setting panel MPC is likely to keep the policy rates static in its first bi-monthly monetary policy for the current fiscal. In its three-day deliberation on the next monetary policy that started on Monday amid sudden surge in COVID-19 cases and the government’s recent mandate has been asking the central bank to keep retail inflation around 4 per cent.
The Reserve Bank will announce the resolution of the Monetary Policy Committee (MPC) on April 7 in its first bi- monthly monetary policy for the current fiscal. There is growing fear that the any adverse monetary intervention at the time when the Covid affected economy is struggling to come back to normal might upset the apple cart.
India’s inflation rate rose to 5.3 per cent last month against the industry expectation of 4.8 per cent. Seen the backdrop of the passing of the US$ 1.9 trillion covid relief package in US and rising bond yields along with hardening crude oil prices has pushed up inflation lookup particularly for the emerging markets. This is particularly so for Turkey, Russia and Brazil. With this the government has also held back tariffs and duty cuts despite several pleas by the RBI. The US relief package has projected a higher growth for the world economy viz the US economy and the former is expected to grow by over 6 per cent.
Since February this year, the RBI has accepted a modest hike in the benchmark bond yield. The average rupee dollar rate is stronger this year as compared to the December value by as much as 2.2 per cent since March hence appreciating by as much as 5 per cent in fiscal 2021.
