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Tag: RBI annual report

  • High WPI could put strain on retail inflation: RBI

    Sounding a be aware of warning, the Reserve Bank mentioned on Friday mentioned there’s a danger of excessive wholesale worth inflation (WPI) placing strain on the retail inflation, albeit with a lag.

    In its annual report, the RBI mentioned that the cost-push pressures from excessive industrial uncooked materials costs, transportation prices and international logistics, and provide chain bottlenecks proceed to impinge on core inflation.

    “The substantial wedge between wholesale and retail price inflation amidst a sharp rise in manufactured products’ inflation poses the risk of a possible passthrough of input cost pressures to retail inflation with a lag, although slack in the economy is muting the pass-through,” the central financial institution famous.

    The battle over Ukraine and the ensuing spike in commodity costs has overcast the outlook for inflation in India as in the remainder of the world, it added.

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    To management spiralling costs, the federal government had just lately lower excise obligation on petrol and diesel and in addition waived import obligation on some uncooked supplies used within the metal and plastic business. Besides, export obligation was hiked on iron ore and iron pellets.

    An increase in worth throughout all objects from gas to greens and cooking oil pushed WPI or wholesale worth inflation to a file excessive of 15.08 per cent in April and retail inflation to a virtually eight-year excessive of seven.79 per cent.

    High inflation prompted the Reserve Bank to carry an unscheduled assembly to lift the benchmark rate of interest by 40 foundation factors to 4.40 per cent earlier this month.

  • Stock market ‘bubble’ a fear for RBI

    The Reserve Bank of India (RBI) has once more raised the crimson flag over the query of a bubble within the inventory markets, which surged to document highs even after the Covid pandemic hit the nation.
    “This order of asset price inflation in the context of the estimated 8 per cent contraction in GDP in 2020-21 poses the risk of a bubble,” the RBI mentioned.
    The central financial institution had raised the inventory market bubble challenge final 12 months additionally when inventory costs skyrocketed.
    “India’s equity prices also surged to record highs, with the benchmark index (Sensex) crossing 50,000 mark on January 21, 2021 to touch a peak of 52,154 on February 15, 2021, which represents a 100.7 per cent increase from the slump just before beginning of the nationwide lockdown (i.e., since March 23, 2020) and a 68.0 per cent increase over the year 2020-21,” the RBI’s Annual Report for 2020-21 mentioned.

    On August 22, 2020, RBI Governor Shaktikanta Das mentioned there was a transparent disconnect between the sharp surge in markets and the state of actual financial system, as surplus international liquidity was driving up asset costs worldwide.

  • RBI Annual Report for 2020-21: ‘Fall in provisions, sharp forex gains led to higher RBI surplus’

    The international trade transactions of the central financial institution have come as a saviour for the federal government even because the Covid pandemic continues to rage throughout the nation. The Reserve Bank of India (RBI) has been capable of switch a better quantity to the federal government as surplus this 12 months following a pointy fall in provisions and positive aspects from international trade transactions in the course of the 12 months ended March 2021.
    The central financial institution’s achieve from international trade transactions rose from Rs 29,993 crore to Rs 50,629 crore in 2020-21. A very good chunk of the cash transferred to the federal government was revenue from the sale of {dollars} over the past three months of FY21 — $25.94 billion in March, $24.57 billion in February and $15.37 billion in January. Last 12 months, RBI greenback gross sales had been simply $8.03 billion in March and $1.46 billion in February.
    The RBI final week determined to switch a better quantity of Rs 99,122 crore to the federal government regardless of the 12 months FY21 being a nine-month interval as in opposition to Rs 57,127 crore within the earlier 12-month interval. The RBI transfer, which is prone to increase the federal government’s funds, comes at a time when the true financial system indicators moderated by way of April-May 2021 because the second wave of Covid-19 took a heavy toll. “While the economy has not moderated to the extent during the first wave, the surrounding uncertainties can act as a deterrent in the immediate period,” RBI stated in its Annual Report for 2020-21, whereas anticipating a ten.5 per cent progress in 2021-22.

    ExplainedProfit from sale of dollarsA good chunk of the cash transferred to the federal government was revenue from sale of {dollars} in final 3 months of FY21 — $25.94 billion in March, $24.57 billion in February and $15.37 billion in January.

    Going forward, because the vaccination drive picks up and instances of infections fall, a pointy turnaround in progress is probably going, supported by sturdy beneficial base results, it stated. “In the midst of the second wave as 2021-22 commences, pervasive despair is being lifted by cautious optimism built up by vaccination drives,” the central financial institution stated.
    The central financial institution stated the rupee gained by 3.5 per cent (based mostly on USD/rupee closing charges as at end-March 2021 over end-March 2020) however underperformed vis-a-vis its Asian friends throughout 2020-21. In This autumn of 2020-21, whereas the Indian rupee remained supported by international portfolio flows and merchant-related inflows, aiding the RBI to promote {dollars} at a achieve, greenback purchases virtually matched gross sales.

    Under Section 47 of the RBI Act, 1934, after making provisions for dangerous and uncertain money owed, depreciation in property, contribution to workers and superannuation funds and for all issues for which provisions are to be made by or below the Act or which are normally offered by bankers, the stability of the income of the Reserve Bank is required to be paid to the central authorities.
    According to the RBI report, in India, the tempo of contagion of the second wave has been alarming, stretching well being infrastructure.

    The onset of the second wave has triggered a raft of revisions to progress projections, with the consensus gravitating in direction of the Reserve Bank’s projection of 10.5 per cent for the 12 months 2021-22 with 26.2 per cent progress in Q1, 8.3 per cent in Q2, 5.4 per cent in Q3 and 6.2 per cent in This autumn.
    The dimension of the RBI stability sheet elevated by 6.99 per cent from Rs 53,34,792 crore as on June 30, 2020 to Rs 57,07,669 crore as on March 31, 2021, the report stated.

  • COVID second wave triggers raft of progress forecast revisions: RBI annual report

    Reserve Bank of India on Thursday stated that the second wave of COVID-19 pandemic has triggered revision of progress projections for the present monetary 12 months with consensus gravitating in direction of its earlier forecast of 10.5 per cent.
    The central financial institution, in its annual report for 2020-2021, additional stated that earlier 12 months has left a scar on the financial system and “in the midst of the second wave, as 2021-22 commences, pervasive despair is being lifted by cautious optimism built up by vaccination drives.”
    “The onset of the second wave has triggered a raft of revisions to growth projections, with the consensus gravitating towards the Reserve Bank’s projection of 10.5 per cent for the year 2021-22 — 26.2 per cent in Q1, 8.3 per cent in Q2, 5.4 per cent in Q3 and 6.2 per cent in Q4,” it stated.

    The pandemic, it added, “is the biggest risk to this outlook. Yet, upsides also stem from the capex push by the government, rising capacity utilisation and the turnaround in capital goods imports.”
    RBI additional stated {that a} collective world effort to combat the pandemic will certainly carry higher outcomes than particular person international locations preventing on their very own.
    It additionally stated the conduct of financial coverage in 2021-22 can be guided by evolving macroeconomic circumstances, with a bias to stay supportive of progress until it positive aspects traction on a sturdy foundation whereas making certain inflation stays inside the goal.
    According to it the tempo of contagion within the second wave of COVID-19 pandemic has been alarming, stretching the well being infrastructure by way of the capability to deal with a surge of this measurement and velocity.
    The report stated the deterioration in main fiscal indicators in 2020-21 could also be attributed to the pandemic superimposed on a cyclical slowdown in tax revenues and a counter-pandemic fiscal push by larger authorities expenditure.
    “Going forward, as growth revives and economy gets back on track, it is important for the government to adhere to a clear exit strategy and build fiscal buffers, which can be tapped into in events of future shocks to growth,” the RBI stated.
    For April and early May 2021, obtainable excessive frequency indicators current a blended image, it stated.

    While mobility and sentiment indicators have moderated, a number of exercise indicators have held their very own and proven resilience within the face of the second wave.
    Goods and companies tax (GST) collections crossed the Rs 1 lakh crore mark for the seventh consecutive month in April and notched up the best stage on report, suggesting that manufacturing and companies manufacturing has been maintained, it stated.