08-Aug-2024
2 mins read
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- The RBI MPC voted to retain the key interest rate unchanged at 6.50% for the ninth time in a row.
- The limit of UPI for tax payment is increased from ₹1 lac to ₹5 lac per transaction.
- Forex reserves touched an all-time high of $675 bn as on August 2, in India.
RBI Keeps Repo Rates Unchanged
Reserve Bank of India's (RBI) Monetary Policy Committee (MPC), led by Governor Shaktikanta Das, announced on Aug 8, 2024 that the key interest rate and stance would remain unchanged. The MPC voted in a 4:2 ratio to maintain the repo rate at 6.50% for the 9th consecutive time.
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Focus on Inflation and Growth Stability
Governor Das highlights the importance of focusing on inflation and maintaining price stability to support economic growth. Despite the significant reduction in core inflation, the rising food prices, particularly in July, are a concern. With food inflation contributing 46% to headline inflation, the RBI remains vigilant against complacency.
Economic Projections and Forecasts
The MPC kept the projection of real GDP growth for FY25 at 7.2 per cent, though there were some adjustments at a quarterly level. The inflation forecast was kept unchanged at 4.5 per cent and 4.4 per cent for FY25 and FY26, respectively, by the central bank. "The committee pointed out that careful watch would need to be kept over high-frequency indicators against the backdrop of revision in data that contributed to moderation in Q1: FY25 growth," it said.
New Measures and Proposals
Several new measures were proposed to enhance the financial ecosystem:
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A public repository of digital lending apps to prevent unauthorized lenders.
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Increase in the UPI tax payment limit from Rs 1 lac to Rs 5 lac per transaction.
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Introduction of continuous cheque clearing to speed up cheque processing.
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Proposal for "Delegated Payments" in UPI, allowing primary users to set transaction limits for secondary users.
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India's forex reserves reached a record high of $675 billion as of August 2.
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