Today’s RBI policy was the first after the 2024 Lok Sabha election results were announced on 4th June 2024. It was also the second bi-monthly monetary policy of the financial year 2024-25.
As the Reserve Bank approaches its centenary year, RBI@100, it will gear up even more to remain future-ready for India’s fast growing economy. It will take steps to enhance India’s global footprint. According to the circular issued by RBI Governor before today press briefing.
RBI MPC decided by majority 4:2 to keep policy rates unchanged: Governor Shaktikanta Das
“RBI MPC decided by majority 4:2 to keep policy rates unchanged, RBI to take steps to enhance India’s global footprint,” RBI Governor Shaktikanta Das said. “India economy exhibits strong fundamentals, financial stability,” Das added,
Repo Rate unchanged
RBI Monetary Policy Committee (MPC) kept the repo rate unchanged at 6.5% for the eight consecutive time and will continue with its stance of ‘withdrawal of accommodation. The Central bank kept its benchmark interest rate unchanged in a widely expected move.
“The RBI will continue to be nimble in liquidity management both on the repo and reverse repo front,” the RBI Governor Shaktikanta Das further said.The decision was announced by RBI Governor Shaktikanta Das after the Monetary Policy Committee meeting held from 5th June to 7th June 2024.
Repo rate is the rate at which the RBI lends to commercial banks in the event of any shortfall of funds. The central bank uses repo rate to regulate liquidity in the economy.
GDP growth expected to increase
The RBI Governor said the Indian economy is expected to increase at 7.2 per cent for the financial year 2024-25. It is higher from earlier projection of 7 per cent.
Food inflation remains a big worry and need to be monitored
RBI Governor Shaktikanta Das said that food inflation remains a big worry for the RBI. India on right track on inflation but caution to be maintained, says RBI Governor. In the RBI MPC announcement, Das also said that the Consumer Price Index (CPI) inflation for the current financial year 2024-25 is expected to be 4.5 per cent. Das said the “uncertainties related to food price inflation need to be watched closely. We need a descent of inflation to 4 per cent target on a sustainable basis.”
Slowed down inflation process shocks the people
“FY25 domestic economic activity has maintained resilience,” Shaktikanta Das said. “Headline inflation continues to be in a disinflation trajectory; repeated food price shocks slowed down disinflation process,” Das added.
The RBI governor also said that vegetable prices are currently increasing due to the summer season.
He attributed the deflationary trend in fuel prices primarily to reductions in LPG prices.
Das also pointed out the global trend of rising food prices, indicating a shift in broader market dynamics.
Introduction of Auto-Replenishment of UPI Lite Wallet – Inclusion under the e mandate Framework
UPI Lite was introduced in September 2022 to enable small value payments in a quick and seamless manner through an on-device wallet.
Setting up a Digital Payments Intelligence Platform
The Reserve Bank has taken a number of measures over the years to deepen digital payments while ensuring their safety and security. says RBI Governor.
Inclusion of Recurring Payments with Auto-Replenishment Facility under the e mandate Framework
The adoption of e-mandates for recurring payment transactions has been increasing. It is now proposed to include payments, such as replenishment of balances in Fastag, National Common Mobility Card (NCMC), etc. which are recurring in nature but without any fixed periodicity, in the e-mandate framework. This will enable customers to automatically replenish the balances in Fastag, NCMC, etc. if the balance goes below the threshold limit set by them. This will enhance convenience in making travel / mobility related payments.
RBI transferred Rs 2.11 trillion to government
In his monetary policy speech, RBI Governor Shaktikanta Das said that the Central bank transferred Rs 2.11 trillion to the central government as dividend. The central board decided to keep the contingent reserve buffer of 6.5 per cent, Das added.
Other measures
Monsoon forecast is expected to replenish reservoir levels, says RBI Governor
RBI Governor Shaktikanta Das stated that the forecast of above-normal southwest monsoon by IMD is expected to boost Kharif production.
The marginal standing facility (MSF)and bank rate continue to be at current levels of 6.75%
The third edition of the global hackathon, “HaRBInger 2024” with two themes, namely ‘Zero Financial Frauds’ and ‘Being Divyang Friendly’ will be launched shortly. Said RBI Governor.
The words of Mahatma Gandhi resonate here and I quote, “if we are sure of our path ….., we should go on striving for it incessantly and uninterruptedly.” said by RBI Governor Shashikant Das in the press release today.
Disclaimer: Views in this article are personal opinion of the author based on press briefing, News headlines and Letter issued by RBI Governor on its website today 7th June 2024.
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Very good 👍 article
Very informative article Harshit. Keep it up