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MPC Adds Strength to Modi Govt’s ‘Low Inflation High Growth’ Model

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Aahana Ashi
MPC Adds Strength to Modi Govt’s ‘Low Inflation High Growth’ Model

The lowering of repo rate by 0.25% by the Monetary Policy Committee (MPC) chaired by new Governor Shaktikanta Das has clearly signalled the resolve of the Central Bank and thereby the Modi government.

Admittedly, inflation dropping to an 18-month low of 2.19% in December last year would have been considered when this decision was made.

Most importantly, the government as well as the Bank, fully understands that it is only growth, notwithstanding the former’s role in creating equity, that will lift the lot of millions still living in abject poverty and misery.

Buoyed by the steadily lowering of inflation rates in the last four years on the back of lower food and fuel inflation, by easing of repo rates, the Bank has sought to complement the good work already announced by the interim budget.

The said budget had pretty much kept every section of the society in mind with a long-term focus on the sustainability of the economy.

As a result of the shift in grading from “calibrated tightening” to “neutral” coupled with the reduction in repo rate, there will be affordable credit all around for all sections ranging from small businesses, to homebuyers, to loan-seeking students – everyone is set to be benefited.

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Aahana Ashi
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