It is good that the RBI has kept the repo and reverse repo rates unchanged or else in the current economic scenario any further cut would have been infructuous In the last bi-monthly Monetary Policy Committee’s (MPC) review announced by its Governor Shaktikanta Das on August 6, the Reserve Bank of India (RBI) had kept the policy repo rate unchanged at four per cent. It had also kept the reverse repo rate or the interest rate the banks get on their surplus funds parked with the RBI unchanged at 3.35 per cent. It continued with the “accommodative” stance of the monetary policy as long as necessary to revive growth and mitigate the impact of Covid-19, while ensuring that inflation remains within the...
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Category: Growth & employment
Monetary stimulus – does it matter
In the last bi-monthly monetary policy review announced by the Governor, Shaktikanta Das on August 6, 2020, the Reserve Bank of India (RBI) had kept the policy repo rate — the interest rate charged by the RBI on loans it gives to banks — unchanged at 4%. It had also kept the reverse repo rate or the interest rate the banks get on their surplus funds parked with the RBI unchanged at 3.35%. It also continued with the “accommodative” stance of the monetary policy as long as necessary to revive growth and mitigate the impact of Covid-19, while ensuring that inflation remains within the target. In the build-up to the next bi-monthly review (originally scheduled for October 1, 2020, this...
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A mixed bag
The labour law reforms are being bandied about as the most crucial second generation amendments that will make it easier to do business but must not compromise workers The Narendra Modi Government recently passed three Bills on labour reforms enshrined in three labour codes, namely The Industrial Relations Code, 2020, The Occupational Safety, Health and Working Conditions Code, 2020 and The Code on Social Security, 2020. Along with The Code on Wages, 2019, passed by the Parliament last year, these four labour law reforms are being bandied about as the most crucial second generation amendments that will make it easier to do business, improve the competitiveness of the Indian industry, make it a manufacturing hub and pursue the “Make in...
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Labor reforms – step on the gas
The day September 23, 2020 the monsoon session of Parliament ended abruptly, Modi – government passed three bills on labor reforms enshrined in three labor codes viz. The Industrial Relations Code, 2020; The Occupational Safety, Health and Working Conditions Code, 2020; and The Code on Social Security, 2020 in Rajya Sabha (these were passed by Lok Sabha on the previous day). Along with The Code on Wages, 2019 passed by the Parliament last year, these four reform of labor laws are being bandied as the most crucial second-generation reforms that will make it easier to do business, improve competitiveness of Indian industry, make India a manufacturing hub and pursuing “Make in India”. This is a bold move when viewed in...
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Don’t bank on banks
There’s no pressing need for a firm hit by the crisis to rush to banks for relief. To enjoy the fruits when the going is good and come to the bank or Govt for help when in crisis is unacceptable On March 27 the Reserve Bank of India (RBI) Governor, Shaktikanta Das, announced a comprehensive action plan to resuscitate the economy devastated by the Coronavirus. Apart from measures to increase availability of credit and reduction in the cost of capital, the plan sought to ease the stress of loan repayments on businesses and individuals. Among others, this included a three-month moratorium on payment of instalments in respect of all term loans outstanding on March 31. On May 22, Das announced extension of...
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Banking on banks for bail-out
On March 27, 2020, the Reserve Bank of India (RBI) governor, Shaktikanta Das announced a comprehensive action plan to resuscitate the economy devastated by the Corona virus. Apart from measures to increase availability of credit and reduction in the cost of capital, the plan sought to ease the stress of loan repayments on businesses and individuals. Amongst others, this included 3-month moratorium on payment of installments in respect of all term loans outstanding on March 31, 2020. On May 22, 2020, Das announced extension of the moratorium for three months till August 31, 2020. To ease the burden of payment on those who availed of working capital facilities, the governor allowed them to convert accumulated interest for the deferment period...
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Open doors for trade
The Govt should shed its current protectionism. Instead, it should go for an open trade policy by slashing import duties and eliminating non-tariff barriers While presenting the Union Budget for 2020-21, Finance Minister Nirmala Sitharaman had renewed the commitment of the Modi Government to “Make in India.” She saw this as the most crucial component of the strategy to make India a $5 trillion economy by 2024-25. To achieve this, she targetted doubling of exports from the current over $500 billion to $1 trillion (that includes an increase in farm exports from $40 billion to $100 billion). Faced with a whopping contraction in the Gross Domestic Product (GDP) by close to 25 per cent during the first quarter, a continuing...
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For Atmanirbhar Bharat, go for open trade policy
The ‘Make in India’ reverberated all through the speech of Prime Minister Narendra Modi during his Independence Day address on August 15, 2020. Even before the Corona pandemic, in the Union Budget for 2020-21, Finance Minister, Nirmala Sitharaman proclaimed the commitment of Modi government to this laudable goal. This is the most crucial component of the strategy to make India a US$ 5 trillion economy by 2024-25. Faced with a whopping contraction in GDP (gross domestic product) by close to 25% during the first quarter, continuing slide during the second quarter and projected decline for the whole of current year by 5% – 6.5%, US$ 5 trillion target may have lost much of its sheen for now. Nonetheless, the government...
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Time to be honest
Modi has done everything to make life easier for the taxpayer. Now, it is for the latter — especially those who have not been paying taxes as currently only 1.5 crore of 130 crore Indians comply — to reciprocate Dubbed as a transformative tax reform, on August 13 Prime Minister Narendra Modi launched a ‘Transparent Taxation: Honouring The Honest’ platform via video-conferencing. The main aim of this reform was best captured in the following statement by Modi, “Honest taxpayers play a crucial role in national development. When the life of an honest taxpayer is simplified, he progresses, which leads to the progress of the nation too.” The resources garnered by collecting cess from the people, who regularly pay their taxes, are the...
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Honoring the honest
Dubbed as a transformative tax reform, on August 13, 2020, Prime Minister Narendra Modi launched a ‘Transparent Taxation – Honouring The Honest’ platform via video conferencing. The main aim of this reform is best captured in the following statement by Modi during his address while launching the platform:- “The honest taxpayers play a crucial role in national development. When, the life of an honest taxpayer is simplified, he progresses which leads to progress of the nation too.” The resources garnered by collecting tax from the people who regularly pay tax due from them as per the laws of the land (call them honest tax payers) are the bedrock of any country’s development. This is more so for India where the...
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