Repo Rate Current Affairs - 2019

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5% additional Dearness Allowance approved

Additional installment of Dearness Allowance and Dearness Relief was approved by the Union Cabinet on October 9, 2019. According to the approval, the central government employees are provided with a increase of 5%. Currently it is 12% of the basic pay. Similarly, the Dearness Relief to the pensioners was increased to 5% while its current rate is 12% of the pension.

The increase is being done to compensate the price rise. The increase is based on the recommendations 7th Pay commission

Analysis

The RBI recently has been cutting off the repo rate. It now stands at 5.15% in the last bi – monthly policy review. With this, the inflation is predicted to increase. The increase of the allowances by the cabinet is a precautionary step. The current inflation is around 3% which lies within the boundaries of target inflation set by RBI.

The DA and DR paid to the Central Government employees and pensioners are to adjust the cost of living and to protect their basic pay. Generally, it is revised twice a year.

RBI Consumer Confidence Survey, 2019

According to RBI Consumer Confidence Survey, the consumer confidence dipped to a six-year low. The federal bank says that this is mainly due to decline in employment, income and discretionary spending. The CSI – Current Situation Index fell to 89.4 whereas it was recorded as 95.7 in July. Previously the index hit its low in 2013, when it reached 88.

Key findings of the survey

  • Perception and Expectation of employment continued to decline. It was -24.5 in September. The was -13.1 in July.
  • The sentiment around income turned negative for the first time.
  • Around 47.9% of participants opined that the economic situation of the country has worsened.
  • 5% said that the employment market has worsened
  • 4% believe the situation will get worsen next year.
  • Majority of them believe the prices of essential commodities to increase further.

Around 5,192 households from 13 major cities were involved in the survey. The members were asked general questions about their expectation and perceptions on current economic situation, price situation, employment scenario, personal income and spending.