TMS Ep496: RBI policy rates, IIM autonomy, markets, licence raj

The Reserve Bank of India kept the policy rates and stance unchanged on August 10th, despite a rate hike by the US central bank last month and the recent jump in food inflation. The RBI’s monetary policy committee unanimously decided to keep the repo rate at 6.5 per cent for the third straight meeting. And it increased its FY24 CPI inflation forecast to 5.4 per cent, from 5.1 per cent earlier. The MPC also increased its second quarter retail price inflation projection beyond its comfort zone of 6 per cent. Find out how long the RBI’s wait and watch posture will continue.

Soaring inflation is not good news for the government which is heading into election in a few months from now. Opposition will latch on to the issue of price rise to attack it. Meanwhile, the government is also facing opposition heat over a bill which the Parliament passed recently. The Indian Institutes of Management (Amendment) Bill, 2023 is now headed to the President’s desk. It is being alleged that this bill will dilute the autonomy of the one of most premier institutes of the country. Government, meanwhile, contests it, saying it will bring more transparency in IIMs. So what is this bill all about? And will it really dilute IIM’s autonomy? 

In March this year, at least 12 students of IIM-Indore were offered an annual package of 1.14 crore rupees. Well, soaring inflation will not be a worry for them. But it is for others. Domestic markets fell up to 0.4 per cent in Thursday’s trade after the RBI revised inflation projection for FY24 amid sharp rise in food prices. The introduction of incremental cash reserve ratio, too, kept sentiments in check. With inflation projection above the comfort zone, will delay in rate cut hopes keep bears in control for the near-term? 

Stocks of some domestic electronic manufacturing firms have been on the rise since the government announced the move to restrict import of laptops, tablets and personal computers. But the move has also invited criticism with experts alleging that it was the return of the license raj. But ever wondered what exactly is license raj? And why do people dread it? Listen to this episode of the podcast to know more.