Skip to main content

In govt, bet is on a 50 bps rate reduction

By

'Accommodative Stance Must To Revive Sentiment'
Market players and economists may be betting on 25-basis-point (100bps 1 percentage point) rate cut by the RBI next week, but an influential section within the government believes that nothing less than a 50-bps reduc tion with an “accommodative“ stance will revive investment.
Differences between the RBI and the government over the extent of an interest rate cut have come out in the open in the past few months with the chief economic adviser in the finance ministry Arvind Subramanian expressing disappointment with the central bank's move not to cut rate as well as the monetary policy committee's (MPC) reading of the inflation situation.
Several private sector economists have also criticised MPC's inflation estimates. While efforts have been made to play down the differences, a wide gap in views between the central bank and the finance ministry over the direction of interest rates remains.
Multiple sources in the government told TOI that a small reduction in interest rate will not lead to step-up in growth and investment. They pointed to record low inflation to back their calls for a sharp reduction of at least 50bps when the central bank reviews monetary policy on August 1 and 2. They pointed out that the “pendulum“ has swung “overwhelmingly“ in favour of a sharp cut in rate, given the significant decline in inflationary pressure both on retail and wholesale prices.
The real cost of raising funds has gone up as inflation has slid to record lows.But economists said inflation rates are unlikely to stay at these levels. Sources said this is the best chance to “aggressively“ cut rates when the inflation rate is well below the central bank's comfort level and all available forecasts say they are expected to remain benign for now. Sources added that the central bank may have to clearly articulate its views on switching to an “accommodative“ stance in its statement. An accommodative stance means the prospect of a rate cut is high.
Times of India, New Delhi, 29th July 2017

Comments

Post a Comment

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

By
  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6
Post a Comment
Read more

Jaitley plans to cut MSME tax rate to 25%

By
Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem
1 comment
Read more

Don't forget to verify your income tax return in August: Here's the process

By
  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s
Post a Comment
Read more