You are here: Home » Economy & Policy » News
Business Standard

Despite hike in MSP, inflationary impact to be moderate: Report

On the Reserve Bank's policy stance the report said, a rate cut is likely in August as the MPC will want to wait for good rains, like 2017, given the added uncertainty about agflation

Press Trust of India  |  New Delhi 

vegetables, inflation, mandi

due to the proposed hike in (MSP) for crops is likely to be "moderate" as the ruling market prices are higher in many cases, says a report.

According to Bank of America Merrill Lynch (BofAML), risks are overdone and though will climb to 5.4 per cent in the June quarter, it would be largely owing to base effects.

"Although the market is spooked by the announced increase in MSP prices, the actual is likely to be far more moderate, as the ruling market prices are higher in many cases," BofAML said in a research note.

It further added that "we do not see much from the higher customs duty on mobile handsets, TV panels, processed food".

On the Reserve Bank's policy stance the report said, a rate cut is likely in August as the MPC will want to wait for good rains, like 2017, given the added uncertainty about agflation.

The Reserve Bank in its fifth bi-monthly review of this fiscal kept repo rate unchanged at 6 per cent and reverse repo at 5.75 per cent while raising the forecast for the remainder of 2017-18 to 4.3-4.7 per cent.

The report further noted that the government will breach his target of 3.3 per cent of by 20 bps, to 3.5 per cent, in 2018-19, in the run-up to the 2019 polls.

"This (fiscal slippage) will largely be driven by lower- than-budgeted telecom proceeds, as well as tax collections," it added.

Finance Minister Arun Jaitley projected 3.3 per cent for the next fiscal. Besides, the estimate for 2017-18 has been re-calibrated to 3.5 per cent as against 3.2 per cent of the budget estimate for that year.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, February 02 2018. 19:31 IST
RECOMMENDED FOR YOU