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Is 6% The Right Inflation Rate For India After All? May 25 2021, 9:26 AM May 25 2021, 9:26 AM May 25 2021, 9:26 AM For years, India has debated what the right level of inflation for the economy is. Is it the 5% informal objective pursued by the RBI for many years? Is it 2-6%, the range set for India’s flexible inflation? Or is it 4%, the mid-point of that range?A new research paper suggests that 6% may be the ideal level of inflation for India, adding that any attempt to bring it below that point comes at a significant cost to growth.“For macroec... For years, India has debated what...

The empirical findings of the study broadly confirm higher threshold inflation and higher growth in emerging market economies than in advanced economies. (Representative image) MUMBAI: A Reserve Bank of India (RBI) study has advocated a mix of fiscal and monetary policies to mitigate economic downturn, saying demand side channel needs to be complemented with a conducive monetary transmission mechanism from the supply side. Referring to the 2009 crisis, the study by Development Research Group (DRG) on 'Risk Premium Shocks and Business Cycle Outcomes in India', said that at the micro-level, th...

May 24, 2021 × The Study estimated the trade-off between long run inflation and steady State growth (SSG) rate, whereby the long-term growth would fall by 40 basis points When inflation is higher than the threshold level, estimated at 6 per cent for India, reduction in inflation rate leads to a much smaller gain in the long-term growth compared to when inflation is lower and rises towards the threshold level, according to a Reserve Bank of India study. The Study estimated the trade-off between long run inflation and steady State growth (SSG) rate, whereby the long-term growth would fall by ...

A Reserve Bank of India (RBI) study has advocated a mix of fiscal and monetary policies to mitigate economic downturn, saying demand side channel needs to be complemented with a conducive monetary transmission mechanism from the supply side. Referring to the 2009 crisis, the study by Development Research Group (DRG) on 'Risk Premium Shocks and Business Cycle Outcomes in India', said that at the micro-level, the interest rate spread, attributed to risk premium on loans, increased in response to a rise in loan defaults during the post-2009 period. Also, the credit growth was found to be nega...

Ratna Sahay, Senior Adviser on Gender at the International Monetary Fund (IMF) were the protagonists of the second session of BBVA’s global financial education summit, the 2021 EduFin Summit. During this panel, they analyzed the challenges and opportunities that digitization poses in the post-pandemic world, the difficulties more vulnerable groups face when it comes to accessing financial services and the possible solutions that could be implemented to address these challenges. The challenges of digitization  For the experts, there is no question that the pandemic has led to an accele...