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8/12/2019 Presentation on Current Affair

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BY : MANISHA PANTHA

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Definition : A general increase inprices and fall in the purchasing valueof money.

The inflation rate in India wasrecorded at 8.10 percent in February of2014. Inflation Rate in India isreported by the Ministry of Commerceand Industry, India.


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Amid controversy over fixing interest rates, finance

minister P Chidambaram on Friday 7thmarch said thatParliament could set an inflation target which can form

the basis for monetary policy actions by the Reserve

Bank of India.

"The RBI is obviously worried about growth as much

it is worried about inflation. The key question is how

we go about achieving high growth with low

inflation," RBI governer (RRR) said on 8TH

march2014.


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Monetary policy is the process by which monetaryauthority of a country, generally a central bank

controls the supply of money in the economy by

exercising its control over interest rates in order to

maintain price stability and achieve high economicgrowth.

The term monetary policy is also known as the 'credit

policy' or called 'RBI's money management policy' inIndia.


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*Bank Rate

*Open Market Operations

*Cash Reserve Ratio

*Statutory Liquidity Ratio


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The statement comes in the backdrop ofa debate triggered by a panel headed by

RBI deputy governor Urjit Patel that

suggested that an inflation target of 4%should be fixed, with a band of 2%. The

suggestion immediately triggered a protest

from the government.


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ANALYSIS

"The sovereign has the right to set the (inflation) target,

and then the central bank has the mandate to take steps

to achieve that target... I think there is a degree of

convergence on the way to go forward, and I sincerelyhope that in the years ahead we will be able to take this

forward," Chidambaram told reporters at a press

conference with Rajan by his side.


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In fact, Chidambaram acknowledged thatRajan too had made a similar statement when

the RBI head said that "the government through

Parliament will set an inflation target and leave

the regulator to find ways and means to achieve

that target. I think that is the correct approach."


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"We must achieve both goals of pricestability and growth...I am sure working

together the government and central bank

will be able to achieve these goals,"Chidambaram said.


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*The RBI-appointed Urjit Patel panel hasrecommended that the central bank should set aretail inflation target of 8% by January 2015 and

6% by January 2016. Inflation as measured by theconsumer price index was 8.8% in January.

*A consumer price index (CPI) measures changesin the price level of a market basket of consumergoods and services purchased by households.


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CONCLUSION

RBI Governor Raghu ram Rajan, who was

also present, said the central bank would issue

new bank licenses in "a few weeks" afterobtaining the Election Commission's approval.


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The minister said the fiscal deficit target of 4.6 per

cent of GDP for 2013-14 will be achieved and the

current account deficit (CAD) will remain below USD

40 billion, against an earlier estimate of USD 45

billion.

The minister said measures taken by the RBI and thegovernment are complementary and have delivered

substantially on the goal of stability set 18 months

ago.


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THANK YOU

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