NRI Dunia
Think Outside The Box

RBI annual report calls it ‘cyclical downswing’

The Reserve Bank of India says the ongoing growth deceleration is a “soft patch mutating into a cyclical downswing”, and has underlined reviving consumption and private investment should be the highest priority for policymakers and government.

In the annual report for FY19, released Thursday, the central bank concedes that diagnosing the exact problems is “difficult”, but reiterates that the issues are not structural in nature, barring those around land, labour and agri produce marketing.

“The key question that confronts the economy is: are we dealing with a soft patch, or a cyclical downswing, or a structural slowdown?” the RBI, which has revised down its GDP forecast to 6.9 per cent, says and concludes that “the ongoing deceleration can be in the nature of a soft patch mutating into a cyclical downswing, rather than a deep structural one.”
The RBI, which has cut its key rates by 1.10 per cent to a nine-year low of 5.4 per cent in four successive rate cuts, to help revive sagging growth, says reviving consumption and private investment have assumed the “highest priority” now for all.

Key findings

n the annual report for FY19, released Thursday, the central bank concedes that diagnosing the exact problems is “difficult”, but reiterates that the issues are not structural in nature, barring those around land, labour and agri produce marketing.

“The key question that confronts the economy is: are we dealing with a soft patch, or a cyclical downswing, or a structural slowdown?” the RBI, which has revised down its GDP forecast to 6.9 per cent, says and concludes that “the ongoing deceleration can be in the nature of a soft patch mutating into a cyclical downswing, rather than a deep structural one.”
The RBI, which has cut its key rates by 1.10 per cent to a nine-year low of 5.4 per cent in four successive rate cuts, to help revive sagging growth, says reviving consumption and private investment have assumed the “highest priority” now for all. — PTI

Key findings

Aggregate demand has weakened more than anticipated
Suggests focus on improving ease of doing business, reforms in land and labour laws
Loan waivers, pay panel and income support schemes hindering ability to deliver stimulus
But strong domestic macroeconomic fundamentals should act as a buffer against volatility
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