Transfin.
HomeNewsGuidesReadsPodcastsTRANSFIN. EOD
  1. Reads
  2. Lite

RBI Conclusions on Investment And Inflation

Professor of Financial Economics and Part-time Value Investor, Transfin.
Aug 2, 2017 8:25 AM 1 min read
Editorial

The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) review concluded today. Key conclusions are summarised below.

On investment environment:

  • An urgent need to reinvigorate private investment
  • Remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana for housing needs of all

On inflationary trends :

  • While inflation has fallen to a historic low, a conclusive segregation of transitory and structural factors driving the disinflation is still elusive
  • Excess supply conditions continue to push down prices of pulses and keep those of cereals in check
  • While the outlook for agriculture appears robust, underlying growth impulses in industry and services are weakening
  • Corporate deleveraging and retrenchment of investment demand principal headwinds

On inflationary headwinds:

  • Implementation of farm loan waivers by States may result in possible fiscal slippages and undermine the quality of public spending, entailing inflationary spillovers
  • If States choose to implement salary and allowance increases similar to the Centre in the current financial year, headline inflation could rise by an additional estimated 100 basis points above the baseline over 18-24 months
  • Price pressures are building up in vegetables and animal proteins in the near months