Skip to content
Search

Latest Stories

India Central Bank Cuts Rates Ahead Of Election

INDIA'S central bank cut interest rates today (7), giving a surprise boost to prime minister Narendra Modi ahead of general elections due this year.

The cut in borrowing costs in Asia's third-biggest economy comes as the economy stutters and other central banks, most notably the Federal Reserve, have sounded increasingly cautious about the global outlook.


The Reserve Bank of India (RBI) said the benchmark repo rate, the level at which it lends to commercial banks would be reduced by 25 basis points to 6.25 per cent.

It marked the first interest rate decision under new bank chief Shaktikanta Das, an ally of Modi who was appointed in December after his predecessor, Urjit Patel, quit following a public spat with the administration over alleged government interference.

The government was believed to be unhappy with the RBI over a number of issues, including its apparent reluctance to cut rates to stimulate the economy.

India's finance ministry had reportedly been pressuring the bank to enact policies to help spur growth ahead of the elections due by May, when Modi will run for a second term.

On Wednesday (6), a key economic advisor to Modi called on the RBI to announce a cut to help boost consumption and investment.

Rajiv Kumar, vice chairman of government think-tank NITI Aayog, said the bank should act to help spur "higher growth rates".

Modi was swept to power in 2014 on a business-friendly manifesto that promised to shake up India's economy and boost jobs.

He announced a number of high-profile policies, including the introduction of a new single tax on goods and a controversial currency ban.

But data have raised questions about how successfully he has delivered on his pledges and polls suggest he faces a tough re-election fight.

Statistics showed the economy expanded only 7.1 per cent on-year in July-September, down from 8.2 per cent in the previous quarter.

Analysts say India needs to regularly record growth of at least eight percent to generate employment for the millions entering the workforce each year. But a government report leaked last week showed unemployment at a 45-year-high of 6.1 per cent in 2017-18.

Thursday's cut, which was the first in 18 months, surprised the majority of analysts who had expected rates to be held. Thirty-two out of 43 economists surveyed by Bloomberg News had predicted no change.

Despite the cut the rupee edged up 0.1 per cent against the dollar.

The RBI raised rates twice last year over concerns about rising prices but with inflation currently at an 18-month low the bank said it was time to opt for a reduction.

"Headline inflation is projected to remain soft in the near term reflecting the current low level of inflation and the benign food inflation outlook," the bank said in a statement.

India's retail inflation declined from 3.4 per cent in October 2018 to 2.2 per cent in December, well below the bank's target of four percent.

Central banks around the world have turned more dovish in recent months as they grow concerned about the state of the global economy, the China-US trade war and China's economic malaise.

The Fed has indicated it will slow its pace of rate hikes this year, having raised them four times in 2018, the European Central Bank has indicated that it is not looking to move on rates and the Bank of Japan has again lowered its inflation forecasts.

The Reserve Bank of Australia, Bank of Korea and Bank of Thailand have also tempered their outlooks in recent weeks.

(Reuters)

More For You

modi-trump-getty
Modi shakes hands with Trump before a meeting at Hyderabad House in New Delhi on February 25, 2020. (Photo: Getty Images)

US trade officials in India for talks as tariff deadline nears

US OFFICIALS arrived in India on Tuesday for trade discussions ahead of the implementation of tariffs announced by president Donald Trump.

The meetings come as the US moves forward with reciprocal tariff measures affecting multiple countries, including India.

Keep ReadingShow less
modi-trump-getty
Modi shakes hands with Trump before a meeting at Hyderabad House in New Delhi on February 25, 2020. (Photo: Getty Images)

India open to tariff cuts on £17.7 bn worth of US imports: Report

INDIA is considering cutting tariffs on more than half of US imports valued at £17.7 billion as part of ongoing trade negotiations, two government sources told Reuters.

The move, which would be the most significant tariff reduction in years, is aimed at countering reciprocal tariffs.

Keep ReadingShow less
tata-steel-green

Artist’s impression of Tata Steel’s state-of-the-art Electric Arc Furnace facility being built in Port Talbot. (Image credit: Tata Steel)

Tata Steel

Tata Steel hires local firms for Port Talbot project, creating 300 jobs

TATA STEEL has appointed three South Wales contractors to support its £1.25 billion investment in green steelmaking at Port Talbot. The contracts will create over 300 skilled jobs in the local supply chain.

Bridgend-based Darlow Lloyd & Sons will oversee excavation, recycling, infrastructure, and drainage work for the transition to Electric Arc Furnace (EAF) steelmaking.

Keep ReadingShow less
 Survey Reveals More Britons Reducing Everyday Spending

About 43 per cent of consumers said they were cutting back on everyday purchases, while more than a third reported increasing their savings as a precaution. (Photo: Getty Images)

Getty Images

Survey shows more Britons cutting back on everyday expenses

CONSUMERS in the UK are reducing spending on everyday items as confidence in the economy declines ahead of chancellor Rachel Reeves’s spring statement, according to a KPMG survey.

The survey, conducted among 3,000 UK consumers, found that 58 per cent believed the economy was worsening in the three months to February, up 15 percentage points from the previous quarter, The Guardian reported.

Keep ReadingShow less
23andMe

Many users trusted 23andMe with some of their most sensitive personal information

Getty Images

DNA data of millions at risk as 23andMe declares bankruptcy

The recent Chapter 11 bankruptcy filing by genetic testing company 23andMe has raised serious concerns about the privacy and security of the DNA data of millions of users. Founded in 2006, 23andMe has long been a leader in consumer genetic testing, offering individuals insights into their predisposition to various diseases and the possibility of connecting with unknown relatives. However, with the company now seeking buyers in bankruptcy proceedings, the sale of this genetic data has become a source of alarm for privacy advocates and experts.

Many users trusted 23andMe with some of their most sensitive personal information, their DNA. However, as the company faces financial struggles, privacy experts warn that the future handling of this data may be far less secure. Tazin Kahn, CEO of the nonprofit Cyber Collective, which promotes privacy and cybersecurity for marginalised groups, expressed deep concern about the potential consequences. “Folks have absolutely no say in where their data is going to go,” she said. “How can we be so sure that the downstream impact of whoever purchases this data will not be catastrophic?”

Keep ReadingShow less