Content creators mean business
Social media influencers are flipping the rules by first getting followers and then launching products and ...
BL02_THINK_RBI
A disclaimer: This article is not meant to debate whether the Government should or should not renew the term of RBI governor Raghuram Rajan in September. However, the brouhaha created over his reappointment gives us an opportunity to look at what the common man expects from the RBI, and whether those expectations have been met over the past few years.
The preamble of the RBI describes its basic functions. It is to “regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage”.
The RBI is, therefore, meant to ensure that there is enough money in circulation as well as in stock, that the currency rates are managed well and that banks in the country provide credit.
Inflation and reservesIt has become a tradition to expect the RBI to cut repo rates at every monetary policy announcement. We should remember that any cut in repo rates is more a sentiment booster. Too much money circulating in an economy is an open invitation for inflation.
There is a bewildering array of inflation numbers to choose from in India. But if one looks at one of the popular ones — Consumer Price Index (CPI) — the rate of inflation was 10.92 per cent in 2013 and is expected to be around 6 per cent in 2016. Even if one adds a percentage for statistical error, it is clear that there is not too much money chasing too few goods.
It is another matter that the amount of black money in circulation probably matches the amount of RBI notes in circulation — but this is something no one can do anything about, save talk about it. On May 17, 2013, India’s foreign exchange reserves were $291.96 billion. Reserves as on May 20, 2016, were $360.90 billion. We should take comfort in the fact that this has not gone down in a period of global headwinds and stress.
In September 2013, the ₹/$ ratio was ₹63.79, as against ₹67.06 today. The level of the dollar vis-à-vis the rupee seems just about right if one considers the fact that we have seen worse levels.
A number that provides a snapshot of how banks are using deposits and providing credit is the Credit Deposit Ratio. In September 2013, this ratio was 77.8 and in December 2015 it was 76.8. This drop can be attributed to the reluctance of banks to lend when they realised that they had a lot of dud loans on their books. More than the quantity of credit, it is the deterioration in the quality of credit that should be a cause for worry. If there is one criticism against the RBI, it would be that the asset quality review was done too late.
Taking a holistic view, the common man need not be too unhappy with the RBI. As always, there will always be areas where it could have done better. We should focus on the institution, not the individual who heads it.
If those manning critical posts in India are sacked for non-performance, there would eternally be vacancies aplenty.
The writer is a chartered accountant
Social media influencers are flipping the rules by first getting followers and then launching products and ...
Paneer, once alien to the South, has found a lucrative market in Chennai
WPP agency Wunderman Thompson has launched its annual Future 100 report, lifting the lid on trends shaping the ...
Carriers claim that all measures — including pre-flight tests, cabin sanitisation and fresh air inflow — have ...
What filters should you apply when mining for under-the-radar small-cap stocks? Read on to find more
High valuation, intensely competitive landscape and small cap nature of the stock are key risks.
Amid choppiness, the benchmark indices slipped marginally; approach the week with caution
SBI Cards (₹1,032.7): Witnesses fresh breakoutBetween September and December last year, the stock of SBI Cards ...
Marie leaned back in the chair, holding the brandy to her chest, the rain tapping on the windowpanes. She ...
The rain in Wales falls mainly in the plains...Wait, that is Spain. Let’s start again.Women in deep red ...
The coffee beans were soaked in rum casks:Food can be imported, books sent across seas — as touching rituals ...
That weekend came the news that Champa’s elder daughter was engaged, the proof arriving in the form of Jaimini ...
Social media influencers are flipping the rules by first getting followers and then launching products and ...
WPP agency Wunderman Thompson has launched its annual Future 100 report, lifting the lid on trends shaping the ...
Paneer, once alien to the South, has found a lucrative market in Chennai
The Flipkart kids playing adults are back — this time to push the home grown e-commerce marketplace’s grocery ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor