The Reserve Bank of India Termed the Current Phase Period of Softening

In the annual report for The Reserve Bank of India termed the current phase of sluggishness in the economy as a period of softening which has turned into a cyclical decline. With this, the central bank has said that the top priority of policy makers and the government should be to increase consumption and private investment.

Weakness has increased in some areas
In the annual report for the financial year 2018-19, the Reserve Bank of India has accepted that it is difficult to identify the right problem. But at the same time the central bank said that the nature of issues other than activities related to land, labor and agricultural produce marketing sector is not structural in nature.

Decrease in GDP growth
The Reserve Bank has lowered its estimate of gross domestic product (GDP) growth to 6.9 percent this month. The central bank said that the big question facing the economy at the moment is whether we are in temporary softening or is it a cyclical decline or are structural issues the main reason behind this slowdown.

Repo rate is being reduced
The central bank said that this period of softening could be of cyclical decline rather than a deep structural lethargy. The Reserve Bank of India has cut the critical policy rate repo rate by 1.10% in the year 2019. After four consecutive cuts, the repo rate has come down to a nine-year low of 5.4%.

Sluggish demand has the effect
The central bank said that now the top priority for all is to improve consumption and increase private investment. The Reserve Bank of India said that this can be achieved by strengthening the banking and non-banking sectors, major increase in infrastructure spending and implementation of labor law, taxation and other legal reforms. The Reserve Bank said that the aggregate demand is weaker than expected, due to the slowdown in domestic demand, there is lack of enthusiasm in the economy.

Better monsoon controls inflation
In the midst of the demand for financial incentives, the Reserve Bank has given many such factors, which are affecting the ability of states to give incentives. This includes agricultural loan waiver, implementation of the Seventh Pay Commission and various schemes of income support. The central bank said that the shining aspects of macroeconomic stability include keeping inflation favorable due to better monsoon, controlling fiscal deficit and lower current account deficit.

Challenges in front of rural economy
The rural consumption figures have improved somewhat in the first quarter of the current financial year. “Delayed monsoon may affect crop yield. It may impact rural demand. Bike sales in the first quarter of this year are around nine per cent and tractor sales 14.1 per cent,” the report said. Has been weak. ”

 

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