Take the pledge to vote

For a better tommorow#AajSawaroApnaKal
  • I agree to receive emails from News18

  • I promise to vote in this year's elections no matter what the odds are.
  • Please check above checkbox.

    SUBMIT

Thank you for
taking the pledge

Vote responsibly as each vote counts
and makes a diffrence

Disclaimer:

Issued in public interest by HDFC Life. HDFC Life Insurance Company Limited (Formerly HDFC Standard Life Insurance Company Limited) (“HDFC Life”). CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101 . The name/letters "HDFC" in the name/logo of the company belongs to Housing Development Finance Corporation Limited ("HDFC Limited") and is used by HDFC Life under an agreement entered into with HDFC Limited. ARN EU/04/19/13618
LIVE TV DownloadNews18 App
News18 English
News18 » Business
2-min read

RBI Plays Down Deepening Slowdown as Just 'Cyclical Downswing'

Stating that aggregate demand has "weakened" more than anticipated, the report by RBI says domestic demand is at the "core" of factors that "ails the animal spirits" in the economy.

PTI

Updated:August 29, 2019, 7:16 PM IST
facebookTwitterskypewhatsapp
RBI Plays Down Deepening Slowdown as Just 'Cyclical Downswing'
Image for representation (Reuters)
Loading...

Mumbai: The Reserve Bank says the ongoing growth deceleration is a "soft patch mutating into a cyclical downswing", and has underlined reviving consumption and private investment should be the highest priority for policymakers and government.

In the annual report for FY19, released Thursday, the central bank concedes that diagnosing the exact problems is "difficult", but reiterates that the issues are not structural in nature, barring those around land, labour and agri produce marketing.

"The key question that confronts the economy is: are we dealing with a soft patch, or a cyclical downswing, or a structural slowdown?" the RBI, which has revised down its GDP forecast to 6.9 percent earlier this month, says and concludes that "the ongoing deceleration can be in the nature of a soft patch mutating into a cyclical downswing, rather than a deep structural one."

The RBI, which has cut its key rates by 1.10 percent in 2019 to a nine-year low of 5.4 percent in four successive rate cuts, to help revive the sagging growth, says reviving consumption and private investment have assumed the "highest priority" now for all.

This can be done by strengthening both the banking and non-banking sectors, a "big push" to infrastructure spends and implementation of the much-needed structural reforms in labour

laws, taxation, and other legal reforms, it says.

Stating that aggregate demand has "weakened" more than anticipated, the report says domestic demand is at the "core" of factors that "ails the animal spirits" in the economy.

As a solution to this specific problem, it suggests "continuing focus on improving ease of doing business and reforms in land and labour" laws.

Amid widespread demand for fiscal stimulus, the RBI lists factors like farm loan waivers, implementation of the seventh pay panel report and the various income support schemes are "constraining" the states' ability to deliver fiscal stimulus.

However, the "silver-lining" is the macroeconomic stability, where inflation is expected to be benign on better monsoons, fiscal deficit being reigned in and also the low current account gap, it notes.

The report attributes the troubles that non-banking lenders are facing now to the irrational exuberance and considerable overleveraging, with asset-liability mismatches of the past, and but promises to reduce the regulatory arbitrage between banks and NBFCs.

The banking sector is poised to build upon the consolidation achieved in the year gone by, the report says.

"Going forward, global factors like trade related developments between the US and China and concerns about a slowdown in global growth could weigh upon financial markets. But strong domestic macroeconomic fundamentals should act as a buffer against volatility," the report concludes.

Get the best of News18 delivered to your inbox - subscribe to News18 Daybreak. Follow News18.com on Twitter, Instagram, Facebook, Telegram, TikTok and on YouTube, and stay in the know with what's happening in the world around you – in real time.

Read full article
Loading...
Next Story
Next Story

Also Watch

facebookTwitterskypewhatsapp
Most Active
Company Price Change %Gain
Reliance 1,290.10 4.11
Maruti Suzuki 7,008.90 1.61
Zee Entertain 275.35 1.38
BPCL 466.50 3.47
HDFC Bank 1,252.75 -0.36
Company Price Change %Gain
Zee Entertain 275.70 1.32
Maruti Suzuki 7,012.00 1.63
Reliance 1,289.00 4.06
HDFC Bank 1,252.75 -0.45
IWML 1,458.60 5.00
Top Gainers
Company Price Change %Gain
Reliance 1,289.05 4.02
BPCL 466.50 3.47
Infosys 790.35 3.40
Tech Mahindra 702.85 2.94
Yes Bank 57.10 2.98
Company Price Change %Gain
Reliance 1,288.35 4.01
Yes Bank 56.95 2.89
Infosys 790.45 3.31
Tata Motors 131.65 2.97
HCL Tech 1,049.25 1.63
Top Losers
Company Price Change %Gain
Eicher Motors 18,398.95 -4.37
JSW Steel 234.70 -3.69
SBI 305.40 -2.66
Larsen 1,488.30 -2.63
Bharti Infratel 257.60 -2.35
Company Price Change %Gain
SBI 305.35 -2.63
Axis Bank 709.50 -2.41
Larsen 1,488.90 -2.54
Hero Motocorp 2,758.30 -2.33
Asian Paints 1,763.00 -2.29

Live TV

Countdown To Elections Results
To Assembly Elections 2018 Results