READ BEFORE YOU PROCEED:
D2G wears no responsibility of the views published here by the respective Author. This Editorial is used here for Study Purpose. Students are advised to learn the word-meaning, The Art of Writing Skills and understand the crux of this Editorial.
MEANINGS are given in BOLD and ITALIC
Reserve Bank of India Governor Raghuram Rajan has opted for caution, citing the uncertainty surrounding the future trajectory (A trajectory or flight path is the path that a moving object follows through space as a function of time) of inflation and signs of an upside bias to expectations. In leaving interest rates unchanged while retaining an “accommodative” (tending to reconcile or accommodate; bringing into harmony)monetary policy, he has chosen to leave all options on the table and wait to see how various global and domestic factors pan out. That the RBI has opted for watchfulness, notwithstanding the prospect of an “above normal” and well-distributed monsoon that has the potential of being “a source of disinflationary (Disinflation is a slowing in the rate of price inflation. Disinflation is used to describe instances when the inflation rate has reduced marginally over the short term) pressure”, is testimony to the central bank’s concern about keeping inflation expectations well-anchored. Consumer price inflation posted a surprisingly rapid acceleration to 5.39 per cent in April on the back of a more-than-seasonal jump in the prices of food items including vegetables, fruits, sugar, meat, fish, pulses and edible oils. Separately, international prices of commodities have started to strengthen, including that of crude oil; this has begun feeding through into higher transport and communication costs. The overall impact of these trends has been that the inflation expectations of households, projected three months ahead, moved up marginally in May after the previous survey had shown a decline. And the elephant in the room is the anticipated implementation of the Seventh Central Pay Commission’s recommendations: to what extent the increased payouts will fan inflation has yet to be quantified, and will ultimately depend on the Centre’s timetable for implementation.
The RBI has also flagged the challenges to sustaining (strengthen or support physically or mentally) India’s economic momentum: global growth is uneven and struggling to gain traction, world trade is floundering (struggle mentally; show or feel great confusion) for want of demand, the U.S. is weighed down by contracting industrial activity and exports, deflationary pressures are building in Japan, and the slowdown in China shows no signs of reversing. Besides, if Britain votes to leave the European Union, there is a real risk of “some turmoil (a state of great disturbance, confusion, or uncertainty) in the financial markets”, according to Dr. Rajan, who added that the RBI is armed with adequate reserves to weather any volatility (volatility is the degree of variation of a trading price series over time as measured by the standard deviation of returns) that may emerge. On the domestic front, green shoots are visible on many fronts. Cargo traffic at major ports, commercial vehicle sales, cement output and steel consumption are leading an upturn that point to a more broad-based expansion. The RBI’s own surveys reveal healthier order books and a pick-up in capacity utilisation that can help trigger a revival in private investment. Ultimately though, a lot will hinge on how the monsoon fares, and how much the Centre is willing to invest by way of capital to bolster (a part on a vehicle or tool providing structural support or reducing friction) public sector banks. The central bank, in the end, can only do so much.
#################
