Mumbai, June 6: Housing loan and auto loan will become dearer with the Reserve Bank of India (RBI) on Wednesday raising its key interest rate for the first time since January 2015.
The country's central bank -- RBI -- has raised repo rate by 25 basis points (bps) to 6.25 per cent, responding to concerns on inflation from surging global crude oil prices.
The RBI, however, maintained its 'neutral' stance on policy, as it has done over four previous bi-monthly policy reviews when it held the repo, or its short term lending rate for commercial banks, at 6 per cent. This stance allows the RBI to move either way on rates.
"The decision of the Monetary Policy Committee (MPC) is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent," the RBI statement said.
"Consequently, the reverse repo rate under the liquidity adjustment facility (LAF) stands adjusted to 6.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent."
Addressing the media following the policy announcement, RBI Governor Urjit Patel elaborated that the neutral stance allowed various options to the central bank and was not in contradiction to raising rates.
"The neutral stance leaves all options open... other central banks do the same, there is no contradiction here," he said in response to a query.
"We have kept the neutral stance as well as responded to the risks to inflation visible in recent months. Inflation has remained over the target level of 4 per cent for over six months," he added.
The six-member MPC voted unanimously for the rate hike that the central bank was undertaking after more than four years and comes for the first time under the Prime Minister Narendra Modi-led government.
The government was quick to laud the latest monetary policy review.
"Welcome monetary policy statement. Quite balanced assessment of growth, inflation and external situation and expectations. Rate hike understandable considering existing interest differentials and oil price movement. Should help in removing uncertainties and steadying markets," Economic Affairs Secretary S.C. Garg said in a tweet.
The RBI also revised upwards the retail inflation range to 4.8-4.9 per cent in the first half of 2018-19, and to 4.7 per cent in the second half, including the impact of house rent allowance (HRA) for central employees, and with risks on the upside.
"The April-May prints show that inflation, excluding food and fuel has hardened. Higher oil prices and input costs have added to the upside risks," RBI Deputy Governor Viral Acharya said.
"On the other hand, growth indicators show that economic revival is on sound footing. Given the inflation target of 4 per cent, it seemed the right time for the MPC to consider a hike of 25 basis points," he added.
The country's retail inflation rose to 4.58 per cent in April from a rise of 4.28 per cent in March and 2.99 per cent in the corresponding period of the previous year.
The fourth quarter estimate of Gross Domestic Product (GDP) released by the Central Statistics Office last month estimated the growth rate at 7.7 per cent, as against 5.6 per cent, 6.3 per cent and 7 per cent respectively in the first three quarters.
Recent crude oil price volatility imparts considerable uncertainty to the inflation outlook, the RBI said.
"Since the MPC meeting in early April, the price of the Indian basket of crude surged from $66 a barrel to $74. This, along with an increase in other global commodity prices and recent global financial market developments, has resulted in a firming up of input cost pressures," the statement said.
To arrive at this decision, the MPC extended its deliberations this time by an extra day.
Commenting on the development, Deloitte India Partner Anis Chakravarty said in a statement: "The RBI was cautious on the factors that could change the course of the underlying optimism, major among them being the projections on oil price movement and rising geopolitical tensions.
"However, given that the committee has maintained a neutral stance, there remains room for manoeuvrability in policy perspective should incoming data show sharp fluctuations."
Arihant Capital Markets Director Anita Gandhi said: "Recent hike in crude prices and better GDP for last quarter of FY 18 suggest inflation trajectory may be on the higher side. Though this may put some pressure on borrowers, it is positive news for the savers in the economy."
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New Delhi (PTI): The Congress on Tuesday urged citizens to protect the ethos of the Constitution and said the struggle to defend India's inherent philosophy must be reinvigorated and reignited in the 75th year of its adoption.
Leader of Opposition in the Lok Sabha Rahul Gandhi said the Constitution is a powerful tool to protect the poorest and weakest sections of society, and the stronger it is, the stronger the country will be.
In a swipe at the BJP, the opposition party also asserted that at a time when those out to destroy the Constitution are showing insincere commitment towards it, "our duty to protect it and fight for its true values becomes all the more relevant".
Congress president Mallikarjun Kharge said the people of India should come together to protect each and every thought expressed in the Constitution.
"The 75th year of the adoption of the Constitution has begun today. I extend my warmest wishes to all Indians on this historic occasion," the Congress president said in a post on X.
"The Constitution of India, painstakingly and carefully drafted by our foremothers and forefathers is the lifeblood of our nation. It guarantees us social, economic and political rights. It constitutes India into a sovereign socialist democratic republic," he said.
Justice, liberty, equality and fraternity are not just ideals or ideas, they are the way of life for 140 crore Indians, Kharge asserted.
"Today, we recall the tremendous contribution of the Constituent Assembly and its prolific members. We are forever indebted to their vision and wisdom," he said.
Kharge said Pandit Jawaharlal Nehru, Babasaheb Dr BR Ambedkar, Sardar Vallabhbhai Patel, Maulana Abul Kalam Azad, Dr Rajendra Prasad, KM Munshi, Sarojini Naidu, Alladi Krishnaswamy Ayyar, Rajkumari Amrit Kaur and several eminent personalities were not just revered national icons but inspiring personalities who became the torchbearers of hope for generations together.
No mention of the Constituent Assembly should be complete without recalling the contribution of the 15 women members who provided equally important inputs for an inclusive India, the Congress president said.
"We must also not forget that the Constituent Assembly received uncountable suggestions from ordinary citizens which are a matter of record," he said.
The Objectives Resolution moved by Nehru and Ambedkar's momentous last speech to the Constituent Assembly form the Magna Carta in protecting the tenets of the Constitution, he said.
"We, the patriotic citizens of India, now have the onerous task of protecting the ethos of the Constitution," Kharge said.
"We, the people of India, should, therefore, come together to protect each and every thought expressed in the Constitution," he said.
In the 75th year of the Constitution's adoption, the struggle to defend India's inherent philosophy must be reinvigorated and reignited, just like the era of the national movement, the Congress president said.
Former Congress chief Rahul Gandhi said, "Heartiest greetings to all of you on Constitution Day. The basic spirit of our Constitution is that justice and rights should be equal for all. Everyone should get an opportunity to live with self-respect."
"The Constitution is a powerful tool to protect the poorest and weakest sections of society. The stronger it is, the stronger our country will be," he said.
"On this day, I salute the fighters, martyrs and every member of the Constituent Assembly who protected the idea of the Constitution and reiterate my resolve to protect it," Gandhi said.
Congress general secretary Priyanka Gandhi Vadra said that freedom fighters and great people together created a Constitution that ensured freedom, equality, fraternity and justice for crores of Indians.
"Our Constitution is the protective shield of crores of Indians which gives them every kind of rights. Happy Constitution Day to all the people of the country," she said.
"Salute to the great ancestors, martyrs, revolutionaries and every member of the Constituent Assembly. This democracy and Constitution, obtained from their tireless hard work and sacrifices, is our pride. Come, let us pledge that we will protect it in every situation," Priyanka Gandhi said in her post in Hindi on X.
Congress general secretary in-charge organisation K C Venugopal said India marks an important landmark as it celebrates the 75th Constitution Day today, a day when Ambedkar's revolutionary text was adopted by the Constituent Assembly.
The Constitution of India is not merely a document, it is India's soul and history of millennia in motion, he said in a post on X.
"A living document that gives hope to 140 crore Indians, the Constitution is what keeps the ideals of justice, equality, inclusivity and democracy alive in India," Venugopal said.
"At a time when those out to destroy the Constitution are showing insincere commitment towards it, our duty to protect it and fight for its true values becomes all the more relevant," Venugopal said.
Congress general secretary in-charge communications Jairam Ramesh recalled two books on the 75th anniversary of the adoption of the Constitution of India by the Constituent Assembly.
Many books have been, and continue to be written on the making of the Constitution. But two have become evergreen classics, he said.
"Granville Austin's scholarly 'The Indian Constitution: Cornerstone of a Nation' first appeared in 1966. He had got unprecedented access to the private collections of a number of key personalities, especially Dr. Rajendra Prasad and K.M. Munshi. He had also interviewed many members of the Constituent Assembly," Ramesh said.
B Shiva Rao's magisterial four-volume "The Framing of the Indian Constitution" was published in 1968, he noted. It has a very poignant letter from Nehru to Shiva Rao on writing a foreword sent just three days before the then prime minister passed away, Ramesh recalled.
Incidentally, Shiva Rao's almost now-forgotten brother Benegal Narsing Rau was a pivotal player in the making of the Constitution, he said.