Whilst the noise on feasibility of budget numbers and risks on sovereign borrowing would persist in the near term, the budget outcome has certainly eased the job for RBI MPC to ease rates further
The RBI reduced its main rate by an unconventional 35 basis points to 5.4%, the lowest since 2010
The detailed instructions in this regard will be issued by the end of September 2019
The NBFC segment has been facing trouble since the collapse of the infra-focused IL&FS in September 2018
Finance Minister Nirmala Sitharaman has ratcheted up pressure on the six-member monetary policy committee for a 'significant cut' to lift economic growth from a five-year low
They are going to cut rates in August and again later, mainly due to low growth and weak inflation, said an economist
Most of the six-member agreed on the need to lower interest rates the minutes showed
A rate cut weakens the rupee as foreign funds reduce their investments, but the flows have been strong and the central bank, encouraging the RBI to continue with its dollar swaps again in April
The question for MPC is whether inflation would further undershoot its own FY20 expectations
Since expectations are already heavily biased toward a rate cut in April, the future guidance and voting pattern of the MPC will be watched closely
Shaktikanta Das will join the gang of dovish-pivoting global central bankers to address the growth pangs in the Indian economy
The meeting, which comes ahead of the next financial year's first MPC meet scheduled for April 4, is aimed at broadening the consultation process
Most of the six-member Monetary Policy Commitee were in favour of spurring growth in Asia's third largest economy amid a soft inflation outlook on a sustained fall in food prices
RBI has lowered its inflation target for April-Sept to 3.2-3.4% from the 3.8-4.2% seen in December and trimmed the growth forecast to 7.2-7.4% from its previous estimate of 7.5%
A research report of DBS Economics said it would be a 'tricky monetary policy path for RBI' as the government projected fiscal slippage in the Budget
This will be the first meeting (February 4-6) of the MPC chaired by new RBI governor Shaktikanta Das
RBI survey says manufacturers foresee hike in input costs, may raise selling prices; crude prices, tightening of financial conditions will impact investment demand, consumption will be sustained
Higher manufacturing growth rate gives "rise to serious doubts about the veracity of new estimates", said Dholakia
The MPC members raised concerns about the risk to the inflation target due to the impact from MSP rise for crops, elevated crude prices and other factors
oil prices are likely to stay at higher levels, adding to the twin deficits (fiscal and current account) and inflationary pressures