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As retail inflation eases, RBI cuts repo rate by 25 bps, loans likely to get cheaper



As retail inflation eases, RBI cuts repo rate by 25 bps, loans likely to get cheaper

[vc_row][vc_column][vc_column_text]This is the first cut in repo rate – the rate at which the RBI lends to banks – since October 2016. MPC headed by RBI governor Urjit Patel stressed on need to reinvigorate private investments, clear infra bottlenecks and provide big thrust to Pradhan Mantri Awas Yojana.

On the basis of an assessment of the current and evolving macro-economic situation at its meeting today, the Monetary Policy Committee (MPC) of the Reserve Bank of India decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.25 per cent to 6.0 per cent with immediate effect. Consequently, the reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.25 per cent.

Following are excerpts from the bi-monthly monetary policy:

The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.

The main considerations underlying the decision are set out in the statement below:

Since the June 2017 meeting of the MPC, impulses of growth have spread across the global economy albeit still lacking the strength of a self-sustaining recovery. Among the advanced economies (AEs), the US has expanded at a faster pace in Q2 after a weak Q1, supported by steadily improving labour market conditions, increasing consumer spending, upbeat consumer confidence helped by softer than expected inflation, and improving industrial production. Policy and political risks, however, continue to cloud the outlook. In the Euro area, the recovery has broadened across constituent economies on the back of falling unemployment and a pickup in private consumption; political uncertainty has receded substantially. In Japan, a modest but steady expansion has been taking hold, underpinned by strengthening exports, accelerating industrial production and wage reflation.

Among emerging market economies (EMEs), growth has regained some lost ground in China in Q2, with retail sales and industrial production rising at a steady pace. Nonetheless, tightening financial conditions on account of deleveraging financial institutions and slowdown in real estate could weigh negatively. The Russian economy has emerged out of two years of recession, aided by falling unemployment, rising retail sales and strong industrial production.

The modest firming up of global demand and stable commodity prices have supported global trade volumes, reflected in rising exports and imports in key economies. In the second half of July, crude prices have risen modestly out of bearish territory on account of inventory drawdown in the US, but the supply overhang persists. Chinese demand has fuelled a recent rally in metal prices, particularly copper. Bullion prices fell to multi-month lows on improved risk appetite but remain vulnerable to shi ifts in the geopolitical environment. Notwithstanding these developments, inflation is well below target in most AEs and is subdued across most EMEs

International financial markets have been resilient to political uncertainties and volatility has declined, except for sporadic reactions to hints of balance sheet adjustments by systemic central banks . In the currency markets, the US dollar weakened further and fell to a multi-month low in July on weak inflation and uncertainty around the policies of the US administration. The Euro, which has remained bullish, rallied further on upbeat economic data.

On the domestic front, a normal and well-distributed south-west monsoon for the second consecutive year has brightened the prospects of agricultural and allied activities and rural demand. By August 1, rainfall was 1 per cent above the long period average (LPA) and 84 per cent of the country’s geographical area received excess to normal precipitation. Kharif sowing has progressed at a pace higher than last year’s, with full-season sowing nearly complete for sugarcane, jute and soyabean. The ini tial uncertainty surrounding sowing of pulses barring tur and rice in some regions has also largely dissipated. Sowing of cotton and coarse cereals has exceeded last year’s levels but for oilseeds, it is lagging. Overall, these developments should help achieve the crop production targets for 2017-18 set by the Ministry of Agriculture at a higher level than the peak attained in the previous year. Meanwhile, procurement operations in respect of rice and wheat during the rabi marketing season have been stepped up to record levels – 36.1 million tonnes in April-June 2017 – and stocks have risen to 1.5 times the buffer norm for the quarter ending September.

Many challenges ahead for the economy

Industrial performance has weakened in April-May 2017. This mainly reflected a broad-based loss of speed in manufacturing. Excess inventories of coal and near stagnant output of crude oil and refinery products combined to slow down mining activity. For electricity generation, deficiency of demand seems to remain a binding constraint. In terms of uses, the output of consumer non-durables accelerated and underlined the resilience of rural demand. It was overwhelmed, however, by contraction in consumer durables – indicative of still sluggish urban demand – and in capital goods, which points to continuing retrenchment of capital formation in the economy. The weakness in the capex cycle was also evident in the number of new investment announcements falling to a 12-year low in Q1, the lack of traction in the implementation of stalled projects, deceleration in the output of infrastructure goods, and the ongoing deleveraging in the corporate sector. The output of core industries was also dragged down by contraction in electricity, coal and fertiliser production in June, owing to excess inventory and tepid demand.

But there’s some reason for optimism too

On the positive side, natural gas recorded an uptick in production after a prolonged decline and steel output remained strong. The 78th round of the Reserve Bank’s industrial outlook survey (IOS) revealed a waning of optimism in Q2 about demand conditions across parameters, and especially on capacity utilisation, profit margins and employment. The manufacturing purchasing managers’ index (PMI) moderated sequentially to a four-month low in June and the future output index also eased marginally. I n July, the PMI declined into the contraction zone with a decrease in new orders and a deterioration in business conditions, reflecting inter alia the roll out of the GST; however, both new export orders and the future output index rose, reflecting optimism in the outlook.

On inflation and prices:

Prices of food and beverages, which went into deflation in May 2017 for the first time in the new CPI series, sank further in June as prices of pulses, vegetables, spices and eggs recorded year-on-year declines and inflation moderated across most other sub-groups. There are now visible signs, however, of the usual seasonal price spikes, even if with a delay and especially in respect of tomatoes, onions and milk.

Fuel inflation declined for the second month in succession as international prices of liquefied petroleum gas (LPG) fell and price increases moderated in the case of coke, and firewood and chips.

Administered prices of LPG and kerosene are set to rise with the calibrated reduction in subsidy.[/vc_column_text][/vc_column][/vc_row]

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Vistara and Air India airlines to merge by March 2024

The latest notification states that SIA is also investing Rs 20,585 million in Air India as part of the transaction.



Vistara and Air India airlines to merge

Tata Sons and Singapore Airlines (SIA) have agreed to merge Air India and Vistara airlines by March 2024. The latest notification states that SIA is also investing Rs 20,585 million in Air India as part of the transaction, giving SIA a 25.1 percent stake in the Air India group.

Currently, Tata Group holds 51 percent of the shares in Vistara, and Singapore Airlines has the remaining 49 percent. According to the release, SIA and Tata have also agreed to take part in future capital investments that may be necessary to finance the expansion and operations of the larger Air India in the fiscal years 2022–2023 and 2023–2024.

Tata Sons chairman N Chandrasekaran said that the merger of Vistara and Air India is an important milestone in their journey to make Air India a truly world-class airline. He said they are transforming Air India, with the aim of providing a great customer experience, every time, for every customer.

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He further said that as part of the transformation, Air India is focusing on growing both its network and fleet, revamping its customer proposition, and enhancing safety, reliability, and on-time performance. He stated that both Tata Sons and Singapore Airlines are excited about the opportunity of creating a strong Air India which would offer both full-service and low-cost services across domestic and international routes. He also thanked Singapore Airlines for their continued partnership.

SAI chief executive officer Goh Choon Phong said the merger provides an opportunity to deepen the company’s relationship with Tata and participate directly in an exciting new growth phase in India’s aviation market.

SAI chief executive officer Goh Choon Phong said Tata Sons is one of the most established and respected names in India. SIA’s collaboration to set up Vistara in 2013 resulted in a market-leading full-service carrier, which has won many global accolades in a short time. He said with this merger, SIA has an opportunity to deepen its relationship with Tata and participate directly in an exciting new growth phase in India’s aviation market. He further said that they will work together to support Air India’s transformation programme, unlock its significant potential, and restore it to its position as a leading airline on the global stage.

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Nykaa CFO Arvind Agarwal resigns

Arvind Agarwal earlier worked with Amazon and joined Nykaa in July 2020.



Arvind Agarwal

Nykaa chief financial officer Arvind Agarwal resigned from his position on Tuesday. The fashion and beauty e-commerce platform announced his resignation.

In a BSE filing, Nykaa informed that Agarwal will be leaving the Company, effective close of business hours on November 25, 2022, to pursue other opportunities in the digital economy and start-up space.

Nykaa’s founder Falguni Nayar hailed Agarwal for the crucial role he played in the company’s emergence as a listed and profitable start-up. Nayar said the company is conscious of Agarwal’s personal dreams and wishes him all the luck.

Upon his resignation, Agarwal said his journey in Nykaa has been incredible so far and all his learning and experiences have set them up for pursuing different personal growth opportunities in the field. He further wished Nykaa good luck for the growth path ahead.

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Arvind Agarwal earlier worked with Amazon and joined Nykaa in July 2020. He was among the key managerial personnel and handled the initial public offer of the firm. Before Amazon, Agarwal worked with Vodafone India for more than 5 years. He had also worked with YOU Telecom, Adani Port, and Tata Teleservices.

Reports said Agarwal paid a total remuneration of Rs 19.58 million during the financial year 2021.

Apart from Nykaa, food delivery application Zomato also saw the resignation of its co-founder Mohit Gupta after 5 years of association with the company.

Gupta, in a message, stated that he decided to move on from Zomato to seek other unknown adventures. He also hailed Deepinder Goyal as he has become a more mature and confident leader who is capable of leading the business into a bright future.

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Jeff Bezos warns of recession, advises people to refrain from buying TV, fridge, cars during holiday season

The former CEO of Amazon also advised small business owners to put off purchasing new equipment in favour of increasing their cash reserves.



Jeff Bezos warns of recession, advises people to refrain from buying TV, fridge, cars during holiday season

In light of the possibility of a global recession, Amazon founder Jeff Bezos advised consumers to refrain from making significant purchases during the holiday season. Given the state of the economy, he urged people to keep their money safe and refrain from irrational spending in the upcoming months.

The business tycoon said American families should avoid purchasing big-ticket items such as new cars, TVs, automobiles, and refrigerators as the US is staring at a recession. He said American household debt has reached a record high of $16.5 trillion, and people are switching to credit to get their ends meet.

The former CEO of Amazon also advised small business owners to put off purchasing new equipment in favour of increasing their cash reserves.

Bezos said Take some risk off the table, adding, Keep some dry powder on hand. Just a little bit of risk reduction could make the difference for that small business if we do get into even more serious economic problems. You’ve got to play the probabilities a little bit.

He said things are slowing down and many sectors of the economy are seeing layoffs, and this is why you should hold onto your money.

Meanwhile, the founder of Amazon stated in the same interview that he will contribute the majority of his $124 billion income to charitable organizations in order to combat climate change and to help those who can bring mankind together in the face of escalating social and political conflicts.

Bezos did not say how much of his money he intended to donate. But he said, Yeah, I do, in response to the question of whether he will donate a significant percentage of his wealth to charity.

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