RBI hikes repo rate by 25 bps; house, auto loans to get costlier
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."
Let the Truth be known. If you read VB and like VB, please be a VB Supporter and Help us deliver the Truth to one and all.
59 percent voter turnout in first phase in J-K, polling peaceful: CEO
Jammu, Sep 18: A voter turnout of about 59 percent -- "the highest in the past seven elections" -- was recorded in the first phase of assembly polls in Jammu and Kashmir on Wednesday, Chief Electoral Officer P K Pole said.
However, these are tentative figures and may rise after the final reports are received about postal ballots, and from remote pockets like Marwah, Wadwan, Dachhan and Machail in Kishtwar, the officer said.
Briefing mediapersons here after polling ended at 6 pm, Pole said the elections -- which covered 24 seats in seven districts -- ended peacefully without any untoward incident.
There are reports of some minor incidents of scuffle or argument from a few polling stations but "no serious incident" occurred that could have forced a repoll, he said.
Over 2.3 million voters were eligible to cast the ballot to determine the fate of 219 candidates, including 90 Independents.
"The polling percentage of 59 percent is highest in the past seven elections -- four Lok Sabha polls and three assembly elections," he said, attributing the increase in the voter turnout to various factors including improved security situation, active participation of political parties and candidates and a campaign by the department.
He said Kishtwar district recorded the highest 77 percent turnout, while Pulwama district witnessed the lowest 46 percent.
Doda district recorded a turnout of 69.33 percent, Ramban district 67.71 percent, Kulgam district 61.57 percent, Anantnag district 54.17 percent and Shopian district 53.64 percent.
In the 2014 assembly elections, the district wise poll percentage was: Pulwama 44 percent, Shopian 48 percent, Kulgam 59 percent, Anantnag 60 percent, Ramban 70 percent, Doda 73 percent and Kishtwar 76 percent.
In Kishtwar districts, he said, the Padder-Nagseni segment recorded the highest 80.67 percent voting followed by Inderwal (80.06 percent) and Kishtwar (78.11 percent).
In the nearby Doda district, Doda west segment recorded 75.98 percent, Doda (70.21 percent) and Bhaderwah (65.27 percent).
In Ramban district, Banihal segment recorded 71.28 percent and Ramban 67.34 percent, he said.
Among the seven constituencies of Anantnag district, Pahalgam recorded the highest voter turnout at 67.86 percent, followed by Kokernag (58 percent), Dooru (57.90 percent), Srigufwara-Bijbehara (56.02 percent), Shangus-Anantnag (52.94 percent), Anantnag West (45.93 percent) and Anantnag 41.58 percent, Pole said.
In Pulwama district, the CEO said, the Pulwama segment witnessed 50.42 percent polling, followed by Rajpora 48.07 percent, Pampore 44.74 percent and Tral 43.21 percent.
In Shopian district, the Shopian segment recorded a voter turnout of 54.72 percent and Zainapora 52.64 percent.
In Kulgam district, D H Pora recorded a turnout of 68 percent, Kulgam 62.70 percent and Devsar 57.33 percent, Pole said.
He said seven districts of south Kashmir had been traditionally low poll percentage constituencies and in some of the past elections, the percentage had not even crossed the single digit.
Asked about a social media video purportedly showing a policeman losing temper and aiming his gun before being overpowered by his colleagues outside a polling station in Kishtwar, he said the district election officer and the returning officer concerned have taken note and issue was resolved amicably.
PDP and BJP candidates were involved in an argument at the polling station.
Pole expressed hope that the remaining two phases on September 25 and October 1 will also see high polling percentage.
Meanwhile, the election commission expressed satisfaction over the long queues of voters at the polling stations showcasing the entire world, the deep trust and confidence of the people of J&K in the democratic exercise.
The polling was held across 3,276 Polling Stations in the seven districts and 24 special polling stations set up for migrant pandits in Jammu, Udhampur and Delhi.
According to officials, 31.42 percent of the more than 35,000 eligible kashmiri migrant voters exercised their franchise. While 27 percent cast their votes at 19 polling stations in Jammu, 40 percent at four polling stations in Delhi and 30 percent at one polling station in Udhampur.
In each of the seven districts where voting was held in the first phase, the voter participation exceeded the participation during the Lok Sabha 2024 elections, the election commission said in a release.
The performance builds on the trend witnessed during the Lok Sabha elections in Jammu and Kashmir which saw a voter turnout of 58.58 percent at polling stations, highest in the last 35 years.
Voting began at 7 am and proceeded steadily through the day. Men and women, the young and old, some too frail to walk and others patiently waiting their turn, queued up outside polling booths across Kashmir Valley and Jammu.
Security forces fanned out to ensure that there was no trouble. The day was largely without incident except for reports of clashes between political workers in some areas of Bijbehara and D H Pora.
