The bi-monthly meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is going to start from Wednesday i.e. today. Information about the decisions of the meeting will be given on April 8.
This meeting is being held at an interval of two months, but the domestic and global situation has changed a lot in these two months. The Indian economy is facing challenges both on the domestic and global front. Inflation is rising because of the Russo-Ukraine war. This is expected to affect the economic development.
Political instability created in neighboring countries of Pakistan and Sri Lanka is also a matter of concern for Indian businessmen. In such a situation, this time the RBI will face many new and difficult challenges to balance the economic growth-inflation. However, it will be interesting to see what measures RBI adopts to boost growth in the midst of these challenges.
1- Russia’s proposal
Due to the war with Ukraine, Western countries have imposed several economic sanctions on Russia. This has raised the possibility of a downturn in the economy there. To deal with this, Russia has given many business-related proposals to its most trusted partner India. This includes cheap crude oil and trading major in rupee-ruble. In such a situation, RBI can make future strategy keeping in mind the proposals of Russia.
2- American pressure
Because of the war with Ukraine, the US is doing everything possible to put pressure on Russia. America has asked other countries including India not to trade with Russia. Along with this, it has also been proposed to meet the shortfall of Russia. The US has said that any countries that do business with Russia will be considered guilty of violating the sanctions. In such a situation, it is also possible to consider US pressure in the RBI meeting.
3- War inflation
The war between Russia and Ukraine has affected supply chains around the world. There is no supply of essential goods. At the same time, international crude oil prices are operating at higher levels. Due to all these reasons, inflation is increasing.
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Many companies in India have increased the price of their goods and services, while many companies are preparing for the hike. In such a situation, the main challenge before the RBI will be to control inflation.
4- Crisis in the neighborhood
The economies of neighboring Pakistan and Sri Lanka have come to a complete standstill. Due to this a political crisis has arisen in both the countries. The interests of Indian traders are associated with both the countries. Indian businessmen’s money is stuck due to the latest crisis. In such a situation, there will be pressure on RBI to give relief to the traders doing business with these countries.
5- Relief to companies
Indian companies are facing trouble in procuring raw materials due to the stalled supply chain and inflation due to the Russo-Ukraine war. Many countries have raised the prices of raw materials. In addition, companies have to spend more money for freight. Due to this, there is a possibility of reduction in the profits of Indian companies in the last and next quarters. In such a situation, the challenge before the RBI will also be to provide money to Indian companies for business.