RBI Current Affairs - 2019
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In it’s Global Economic Outlook report, Fitch Ratings has cut India’s economic growth forecast for the next financial year 2019-20 starting from April 1 to 6.8 per cent from its previous estimate of 7 per cent, on the account of weaker than expected momentum in the economy.
- Even though Fitch Ratings has reduced the GDP forecasts for India, it sees Indian GDP growth to hold up reasonably well, at 6.8 per cent, followed by 7.1 per cent in 2021-22.
- India’s GDP growth for the financial year 2019-20 was reduced to 7.2 per cent from 7.8 per cent earlier in December 2018.
- Further, the growth forecasts for 2020-21 and 2021-22 was reduced to 7 per cent from 7.3 per cent and 7.1 per cent from 7.3 per cent, respectively.
Fitch Ratings observes that Reserve Bank of India (RBI) has adopted a more dovish monetary policy stance and cut interest rates by 0.25 percentage at its February 2019 and it expects another 25 bps cut in 2019, amid protracted below-target inflation and easier global monetary conditions than previously envisaged.
Fitch notes that benign oil price outlook and expectations of accelerating food prices in the coming months should support rural households’ income and consumption.
Reserve Bank of India (RBI) governor Shaktikanta Das called for permanent status to Finance Commission. RBI Governor Shaktikanta Das is also the member of the fifteenth finance commission.
Necessity of the Permanent Status
- The permanent status will ensure consistencies between finance commissions so that there is some certainty in the flow of funds to states.
- The permanent status will also provide for continuity between the successive finance commissions.
- The permanent status will also provide for the finance commission to function as a leaner entity in the intervening period until the next finance commission is set up in a full-fledged manner.
- The establishment of the finance commission through permanent status will also enable it to address issues arising from the implementation of the recommendations of the finance commission during the intervening period.
The RBI governor also called on for a robust expenditure planning without compromising on fiscal consolidation as fiscal federalism gathers momentum in the era of uniform goods and services tax (GST). He said that it is equally important to undertake robust expenditure planning based on a ‘commonly agreed expenditure code’ to address the socio-economic challenges without diluting the goals of fiscal consolidation.