The Reserve Bank of India (RBI) last week announced a 40 basis points increase in the policy repo rate. The rate revision came after two years when the central bank had reduced the rate by a similar quantum.
The rate increase came at a time when the economy was showing signs of revival. The RBI will now have to balance inflation and growth, especially as the pandemic has exposed structural weaknesses in the Indian economy.
While the corporate sector performed better, which is evident from the stock market performance, a recent RBI analysis in its Report on Currency and Finance showed that