RBI authorises a surplus transfer to the Central Government of Rs 30,307 crore 

The Reserve Bank of India has sanctioned a surplus transfer to the Central Government of 30,307 crore rupees for the fiscal year 2021-22. The Reserve Bank of India’s Central Board of Directors met for the 596th time in Mumbai, under the chairmanship of Governor Shaktikanta Das, to adopt the Reserve Bank’s Annual Report and Accounts for the year. The board agreed to keep the Contingency Risk Buffer at 5.50 percent after examining the present economic condition, global and domestic issues, and the effect of recent geopolitical developments.

KEY POINTS:

• Inflation is at its greatest level in years. The April wholesale price index was 15.05 percent. 7.8% is the consumer price index.
• These are extremely high rates, and India is not alone in this regard. In America, where the goal inflation rate is 2%, the most recent inflation rate was 8.5 percent, which has now dropped to 8.3 percent. As a result, worldwide inflation exists.
• Commodity, service, and manufacturing prices have all risen dramatically in the recent year.
• Inflation started in 2021, and the war in Ukraine has intensified it. Right now, the globe is stuck in a massive inflationary trap.

Effect of the Russia-Ukraine War:

• The physical shortage of a wide range of commodities had been accumulating for some time, and then came the shock of war and the sanctions put on Russia, which is a major provider of a variety of goods.
• The war has shut one of the most important supply channels out of Russia and Ukraine, the Black Sea.
• China has committed hara-kiri by implementing a total lockdown in an attempt to eradicate COVID, resulting in a second supply shock due to the lack of manufacturing in China. All of these threads have come together to create a massive shock.
• We are in a scenario where, on the one hand, there is a recessionary tendency, and a recession is on the way because demand is declining, but prices are rising at the same time. This is known as stagflation.

The Overview of Economists on Rising Inflation:

In the case of India, we’ve taken a massive hit from both sides. India was anticipating a strong growth year this year. The World Bank and the International Monetary Fund predicted that India would be the fastest growing large country, and that may still be the case, but early estimates were for 9% growth or more; today estimates are for 7%, 7.5 percent, or even 6%. So, we’re in a difficult situation right now, with inflation growing quickly because inflation is rising everywhere else in the world, and we can’t escape it on our own. Meanwhile, the downtrend, or recessionary tendency, is sweeping the globe, and we can’t avoid it. We may be in a better position to deal with the situation than others.

Attendees:

• Deputy Governor Mahesh Kumar Jain
• Deputy Governor Dr. Michael Debabrata Patra
• Deputy Governor M. Rajeshwar Rao
• Deputy Governor T. Rabi Sankar
• Central Board Director Satish K. Marathe
• Central Board Director S. Gurumurthy,
• Central Board Director Ms. Revathy Iyer
• Central Board Director Prof. Sachin Chaturvedi
• Secretary of the Department of Economic Affairs Ajay Seth
• Secretary of the Department of Financial Services Sanjay Malhotra