Has RBI Maintained Status Quo ?

Maintaining the status quo (Opinion)

The key recommendations of the Urjit Patel Committee implemented by the RBI include :
- the adoption of the new CPI as the key inflation measure,
- transition to its first bi-monthly policy cycle (containing a wealth of information on non-monetary policy measures).
RBI has to mandatorily address urgent monetary policies, as this is an economic and regulatory statement, irrespective of elections.
Assessment of macroeconomic factors led to policy rates being withheld as economic growth in developed countries is moderate. For developing countries like India, biggest threats are :
- renewed volatility of capital flows
- tightening of external financing conditions
Inflation is expected to rise to 8% by January as a result of :
- uncertainty in the setting of minimum support prices,
- outlook for fiscal policy
- possibility of higher commodity prices.
Focus is to bring it down to 6% by 2016.
GDP growth is projected to pick up from a little below 5% to the central estimate of 5.5% ranging from 5 – 6% in 2014-15. Stalled projects have to be cleared, and pick up in export growth will offer brighter prospects.
The transitional period for full implementation of Basel III capital regulations directed at making inflation-linked saving bonds more investor-friendly has been extended to March 31, 2019.

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