Skip to main content

Dear monetary policy committee, it is time to talk to the public (themint)

The demand is not so much as to what the repo rate will be on Wednesday, but what the monetary policy committee, including RBI governor Urjit Patel (second from right), thinks growth and inflation will be six months or even a year down the road. Photo: PTI


The monetary policy committee (MPC) will start its two-day meeting on Tuesday to discuss and vote on what the Reserve Bank of India (RBI) should do with its policy rates.

There are no ready solutions to the monetary shock posed by demonetization, which purged 86% of the currency (by value) in circulation. That said, a thread of clarity over growth and inflation has emerged over the days since Rs1,000 and Rs500 banknotes ceased to be legal tender on 9 November.

It is clear that the move will dent consumer demand and hurt growth over the remaining part of fiscal year 2017. Inflation is likely to ease because of depressed demand conditions, but a forecast on inflation is tricky as delays in the sowing of the rabi crop could potentially spur food inflation.

Nevertheless, the price situation looks under control if one considers the flexible inflation target of 2-6% for the central bank.

A rate cut or even its absence is not as crucial as to what MPC’s thoughts are on the impact of demonetization. None of the MPC members, including RBI governor Urjit Patel, have offered any insights so far on what demonetization would mean for monetary policy. The demand is not so much as to what the repo rate will be on Wednesday, but what MPC thinks growth and inflation will be six months or even a year down the road.

The statement detailing the resolution of the first MPC meet in October was a three-page release that packed in forecasts as well as an outlook endorsed by its members. While an encore is expected this time, for markets hungry for information, the MPC resolution needs to go beyond that. What would be vital are the forecasts for industry, agriculture and services.

The committee should risk being verbose rather than be terse in its resolution statement.

In the first statement by MPC after its maiden meeting in October, this column had argued that the commentary left a lot wanting.

The demand for communication has only increased manifold since then.

Comments

Popular posts from this blog

SC asks Centre to strike a balance on Rohingya issue (.hindu)

Supreme Court orally indicates that the government should not deport Rohingya “now” as the Centre prevails over it to not record any such views in its formal order, citing “international ramifications”.

The Supreme Court on Friday came close to ordering the government not to deport the Rohingya.

It finally settled on merely observing that a balance should be struck between humanitarian concern for the community and the country's national security and economic interests.

The court was hearing a bunch of petitions, one filed by persons within the Rohingya community, against a proposed move to deport over 40,000 Rohingya refugees. A three-judge Bench, led by Chief Justice of India Dipak Misra, began by orally indicating that the government should not deport Rohingya “now”, but the government prevailed on the court to not pass any formal order, citing “international ramifications”. With this, the status quo continues even though the court gave the community liberty to approach it in …

Khar’s experimentation with Himalayan nettle brings recognition (downtoearth)

Nature never fails to surprise us. In many parts of the world, natural resources are the only source of livelihood opportunities available to people. They can be in the form of wild shrubs like Daphne papyracea and Daphne bholua (paper plant) that are used to make paper or Gossypium spp (cotton) that forms the backbone of the textile industry.

Nothing can compete with the dynamism of biological resources. Recently, Girardinia diversifolia (Himalayan nettle), a fibre-yielding plant, has become an important livelihood option for people living in the remote mountainous villages of the Hindu Kush Himalaya.

There is a community in Khar, a hamlet in Darchula district in far-western Nepal, which produces fabrics from Himalayan nettle. The fabric and the things made from it are sold in local as well as national and international markets as high-end products.

A Himalayan nettle value chain development initiative implemented by the Kailash Sacred Landscape Conservation and Development Initiati…

India’s criminal wastage: over 10 million works under MGNREGA incomplete or abandoned (hindu)

In the last three and half years, the rate of work completion under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has drastically declined, leading to wastage of public money and leaving villages more prone to drought. This could also be a reason for people moving out of the programme.

At a time when more than one-third of India’s districts are reeling under a drought-like situation due to deficit rainfall, here comes another bad news. The works started under the MGNREGA—close to 80 per cent related to water conservation, irrigation and land development—are increasingly not being completed or in practice, abandoned.

Going by the data (as on October 12) in the Ministry of Rural Development’s website, which tracks progress of MGNREGA through a comprehensive MIS, 10.4 million works have not been completed since April 2014. In the last three and half years, 39.7 million works were started under the programme. Going by the stipulation under the programme, close to 7…