ET NEWS

High-frequency indicators pointed to the likelihood of robust September-quarter growth, central bank governor Sanjay Malhotra had said during the October 1 monetary policy review, although he was more circumspect about the pace of economic expansion in 2H of FY26 due to the impact of punitive US tariffs.“Several indicators suggest that agricultural prospects are bright in the current year; consequently, rural demand is likely to be buoyant," Malhotra was cited as saying in the minutes of the policy review published Wednesday. "Strong services sector growth and steady employment conditions would support growth. “Thereafter, however, it is expected to soften due to the impact of tariffs, although the GST rationalisation would partially cushion the impact.” During the October 1 policy review, the Reserve Bank of India (RBI) had increased its GDP growth forecast for the second quarter to 7% from 6.7%, and that for FY26 to 6.8% from 6.5%, while indicating that growth would be frontloaded.Malhotra said that policy uncertainty, rapidly evolving developments, and the foggy outlook suggest the Monetary Policy Committee (MPC) exercise caution and take a view for each policy as per the then prevailing macroeconomic conditions and outlooOn October 1, the six-member MPC unanimously decided to keep the repo rate unchanged at 5.50%. The MPC also decided to continue with a neutral policy stance.Elbow RoomRBI Deputy Governor Poonam Gupta said that slower growth in H2 and a benign inflation rate have potentially opened some space for lowering the policy rates further.Yet, she said it was difficult for her to vote for a rate cut at this juncture for three reasons: Steps taken by the government to boost consumer sentiment are working through, past rate cuts are being transmitted, and the global uncertainties are evolving at a very fast pace.The recent fall in Consumer Price Index-based inflation and expectations the gauge would undershoot RBI’s projections have bolstered the case for rate cut. Data published Monday showed CPI inflation fell to an eight-year low of 1.54% in September.Indranil Bhattacharyya, RBI executive director and one of the three internal members, said that current ultra-low levels of inflation should be seen as a transitory phenomenon.Bhattacharyya said he voted for a pause as a rate cut, amid heightened uncertainty, may not have the intended impact. In addition, given that the market had not expected a rate cut, doing so would surprise the market, which is detrimental in terms of policy credibility over the medium term.External member Ram Singh, who favoured a change in stance to accommodative, said one more rate cut ran the risk of an overdose when transmission of past reductions was yet to play out.“The available scope for rates can be leveraged to sustain the growth momentum for a longer period by extending the easing cycle. A change in stance to accommodative increases the odds of a rate cut in this easing cycle,” he said.Nagesh Kumar, external member of MPC, called for supporting measures via liquidity provision, credit guarantees/ moratorium for MSMEs would be important. He said while the effect of higher tariffs on the economic growth rate may be limited to between 40 and 60 basis points, a larger effect is expected on MSMEs and jobs.One basis point is a hundredth of a percentage point.

September saw a flurry of activity in mutual fund equity portfolios with top managers reshuffling exposures to banks, automobiles, and select consumer and insurance stocks. Auto stocks drew heightened interest following the GST rate cuts, while banks and lenders saw sharp additions and exits, revealing fund managers’ divergent views on their near-term outlook. 124592964

Mumbai: The rupee reversed its retreating trend Wednesday to close at 88.0750 against the US dollar, with market participants attributing the steepest appreciation in nearly four months to unexpectedly heavy Reserve Bank of India (RBI) dollar sales that seemingly underscored Mint Road's discomfort with speculative positions. The rupee had closed at 88.7975 against the dollar Tuesday. The 0.8% rise through the day comes after the rupee consistently closed in 88.51 to 88.80 range in the last three weeks, likely due to RBI's intervention to support the rupee. "While inflows in local equity and debt markets have improved, higher tariffs remain an overhang for the rupee. Market chatter suggests that RBI's move was aimed at curbing speculative long-dollar positions," said Dilip Parmar, research analyst, HDFC Securities.

Mumbai: High-frequency indicators pointed to the likelihood of robust September-quarter growth, central bank governor Sanjay Malhotra had said during the October 1 monetary policy review, although he was more circumspect about the pace of economic expansion in 2H of FY26 due to the impact of punitive US tariffs."Several indicators suggest that agricultural prospects are bright in the current year; consequently, rural demand is likely to be buoyant," Malhotra was cited as saying in the minutes of the policy review published on Wednesday. "Strong services sector growth and steady employment conditions would support growth. "Thereafter, however, it is expected to soften due to the impact of tariffs, although the GST rationalisation would partially cushion the impact." During the October 1 policy review, the Reserve Bank of India (RBI) had increased its GDP growth forecast for the second quarter to 7% from 6.7%, and that for FY26 to 6.8% from 6.5%, while indicating that growth would be frontloaded.Malhotra said policy uncertainty, rapidly evolving developments,and the foggy outlook suggest the Monetary Policy Committee (MPC) exercise caution and take a view for each policy as per the then prevailing macroeconomic conditions and outlook.On October 1, the six-member MPC unanimously decided to keep the repo rate unchanged at 5.50%. The MPC also decided to continue with a neutral policy stance. 124592747 Elbow RoomRBI Deputy Governor Poonam Gupta said slower growth in H2 and a benign inflation rate have potentially opened some space for lowering the policy rates further.Yet, she said it was difficult for her to vote for a rate cut at this juncture for three reasons: Steps taken by the government to boost consumer sentiment are working through, past rate cuts are being transmitted, and the global uncertainties are evolving at a very fast pace.The recent fall in Consumer Price Index-based inflation and expectations the gauge would undershoot RBI’s projections have bolstered the case for rate cut. Data published Monday showed CPI inflation fell to an eight-year low of 1.54% in September.Indranil Bhattacharyya, RBI executive director and one of the three internal members, said current ultra-low levels of inflation should be seen as a transitory phenomenon.Bhattacharyya said he voted for a pause as a rate cut, amid heightened uncertainty, may not have the intended impact. In addition, given that the market had not expected a rate cut, doing so would surprise the market, which is detrimental in terms of policy credibility over the medium term.External member Ram Singh, who favoured a change in stance to accommodative, said one more rate cut ran the risk of an overdose when transmission of past reductions was yet to play out. “The available scope for rates can be leveraged to sustain the growth momentum for a longer period by extending the easing cycle. A change in stance to accommodative increases the odds of a rate cut in this easing cycle,” he said. Nagesh Kumar, external member of MPC, called for supporting measures via liquidity provision, credit guarantees/ moratorium for MSMEs would be important. He said while the effect of higher tariffs on the economic growth rate may be limited to between 40 and 60 basis points, a larger effect is expected on MSMEs and jobs. One basis point is a hundredth of a percentage point.

Mumbai: High-frequency indicators pointed to the likelihood of robust September-quarter growth, central bank governor Sanjay Malhotra had said during the October 1 monetary policy review, although he was more circumspect about the pace of economic expansion in 2H of FY26 due to the impact of punitive US tariffs."Several indicators suggest that agricultural prospects are bright in the current year; consequently, rural demand is likely to be buoyant," Malhotra was cited as saying in the minutes of the policy review published on Wednesday. "Strong services sector growth and steady employment conditions would support growth. "Thereafter, however, it is expected to soften due to the impact of tariffs, although the GST rationalisation would partially cushion the impact." During the October 1 policy review, the Reserve Bank of India (RBI) had increased its GDP growth forecast for the second quarter to 7% from 6.7%, and that for FY26 to 6.8% from 6.5%, while indicating that growth would be frontloaded.Malhotra said policy uncertainty, rapidly evolving developments,and the foggy outlook suggest the Monetary Policy Committee (MPC) exercise caution and take a view for each policy as per the then prevailing macroeconomic conditions and outlook.On October 1, the six-member MPC unanimously decided to keep the repo rate unchanged at 5.50%. The MPC also decided to continue with a neutral policy stance. 124592747 Elbow RoomRBI Deputy Governor Poonam Gupta said slower growth in H2 and a benign inflation rate have potentially opened some space for lowering the policy rates further.Yet, she said it was difficult for her to vote for a rate cut at this juncture for three reasons: Steps taken by the government to boost consumer sentiment are working through, past rate cuts are being transmitted, and the global uncertainties are evolving at a very fast pace.The recent fall in Consumer Price Index-based inflation and expectations the gauge would undershoot RBI’s projections have bolstered the case for rate cut. Data published Monday showed CPI inflation fell to an eight-year low of 1.54% in September.Indranil Bhattacharyya, RBI executive director and one of the three internal members, said current ultra-low levels of inflation should be seen as a transitory phenomenon.Bhattacharyya said he voted for a pause as a rate cut, amid heightened uncertainty, may not have the intended impact. In addition, given that the market had not expected a rate cut, doing so would surprise the market, which is detrimental in terms of policy credibility over the medium term.External member Ram Singh, who favoured a change in stance to accommodative, said one more rate cut ran the risk of an overdose when transmission of past reductions was yet to play out. “The available scope for rates can be leveraged to sustain the growth momentum for a longer period by extending the easing cycle. A change in stance to accommodative increases the odds of a rate cut in this easing cycle,” he said. Nagesh Kumar, external member of MPC, called for supporting measures via liquidity provision, credit guarantees/ moratorium for MSMEs would be important. He said while the effect of higher tariffs on the economic growth rate may be limited to between 40 and 60 basis points, a larger effect is expected on MSMEs and jobs. One basis point is a hundredth of a percentage point.

After backlash from the Opposition and criticism over losing investments to Andhra Pradesh, DMK-led Tamil Nadu government has postponed the move to introduce a bill in the ongoing assembly session to ban the use of Hindi language in hoardings, boards, print advertisements, films and songs throughout the state.Chief minister MK Stalin had decided to introduce the bill in the state assembly, according to people familiar with the matter, as the government had resurrected the politically potent issue of Hindi imposition ahead of next year’s assembly election. The decision was taken after Stalin’s meeting with legal experts late on Tuesday night, the people said, adding that the move was aimed at sending a signal to the Centre.However, the government came under severe criticism from the BJP as the move came at a time when Andhra Pradesh bagged Google's $ 15 billion investment in data centre cluster in Vizag. Former state BJP chief K Annamalai posted on X, "AP CM: Signed a landmark agreement with Google to set up a $15 billion AI Data Centre in Visakhapatnam. TN CM: Let's table a bill & Ban Hindi in our State. Yo! DMK and their Pathetic politics & misplaced priorities, sigh!" Folloqing this, TN Fact check unit put out a post saying there was no such move afoot.Earlier this year, the Tamil Nadu government had replaced the rupee sign with the Tamil symbol for “Ru” in the logo of the state budget.The bill to ban Hindi is expected to escalate the row between the Centre and the Tamil Nadu government, which has been opposed to the three-language formula under the National Education Policy (NEP).Union education minister Dharmendra Pradhan had charged the Tamil Nadu government with going against the Constitution and said that the Centre would not allocate funds to it under the Samagra Shiksha Abhiyan unless the state implemented the NEP. Later, in a letter written to Stalin on February 21, Pradhan asserted that the three-language policy had been the backbone of India’s education policy since 1968. The state, on its part, has taken the Centre to the Supreme Court over non-release of more than Rs 2,000 crore under the scheme, alleging that the policy amounted to imposition of Hindi on a Tamil-speaking state.While the NEP 2020 stipulates a three-language policy, Tamil Nadu teaches only two languages – English and Tamil. No party, barring the BJP, in Tamil Nadu supports the three-language formula. Even the erstwhile AIADMK government had rejected the three-language policy when it was introduced in 2020. The BJP’s allies, the Pattali Makkal Katchi and the Desiya Murpokku Dravida Kazhagam, have criticised the imposition of the NEP on Tamil Nadu and characterised it as an infringement on the state’s autonomy.