Highlights:
Repo rate unchanged at 6%
Fiscal Slippage by the Centre from the fiscal consolidation path and its likely adverse
deficit Overview impact on the headline inflation and the cost of borrowing are often raised as
slippage a major concern.
The combined (Centre and all States together) fiscal deficit matters for the
headline inflation. By then, 26 states had presented their budgets and their
Rationale combined budgeted fiscal deficit was estimated to be 2.6 per cent of GDP. To a
large extent, the fiscal slippage of the Centre was compensated by the fiscal
discipline shown by the States.
As per expectations about the tax revenues exceeding the revised estimates for
the year 2017-18, reducing the estimate of the fiscal slippage by the Centre, if
Concerns the buoyancy persists, could substantially reduce the magnitude of the fiscal
slippage next year. On the other hand, the slippage could occur for various
reasons including the forthcoming elections in States and the Centre.
Negative output gap, trade war possibility, volatility in oil and gas prices,
Overview
concerns regarding adequate monsoon.
Outstanding bank credit had touched Rs 82.06 lakh crore in Jan 2018,
External recording an y-o-y growth of 111% since February,2016, showing that the
factors credit offtake was picking up and thus closing of output gap. Trade
Rationale protectionism and volatile oil and gas prices would , on the other hand, affect
the recovering domestic economy.
Liquidity in the system moved between surplus and deficit during February-
Overview
March 2018
From a daily net average surplus of Rs 272 billion during February 1-11, 2018,
liquidity moved into deficit during February 12-March 1, reflecting a slowdown
in government spending and large tax collections. After turning into surplus
Liquidity during March 2-15, the system moved into deficit again during March 16-22
Rationale mainly on account of quarterly advance tax outflows. In mid-March, additional
liquidity of Rs 1 trillion got released into the system through redemption of
Treasury Bills issued under the Market Stabilisation Scheme (MSS) in April and
May 2017. On the whole, the Reserve Bank injected Rs 60 billion and Rs 213
billion on a net daily average basis in February and March, respectively.
MPC-Feb 2019
Highlights:
Repo rate cut by 25 basis points from 6.5 % to 6.25%.
Liquidity injected under the LAF was ₹996 billion in December on an average
Overview
daily net basis, and ₹329 billion in January
The weighted average call rate (WACR) traded below the policy repo rate on 12
out of 20 days in December, all 23 days in January and 4 days in February (up
to February 6). The WACR was below the repo rate on an average by 4 basis
points in December and 11 basis points each in January and February. Currency
Liquidity
in circulation expanded sharply during December and January. The liquidity
Rationale
needs arising out of expansion in currency were met by the Reserve Bank
through injection of durable liquidity amounting to ₹500 billion each in
December and January through purchases under open market operations
(OMOs). Accordingly, total durable liquidity injected through OMOs has
aggregated ₹2.36 trillion during 2018-19 so far