Reserve bank of India Efforts to strengthen Economy

Reserve Bank of India yesterday reduced growth forecast from 7.3 % to 6.7 % for the financial year ending March 2018.RBI has maintained key rates on hold.RBI Governor Urjit Patel has cautioned financial stimulus, due to central and state deficit at 6 %. If we are not cautious macroeconomic stability will be affected Patel said. so we may expect the government to spend more to revive the economy.The reserve bank governor is expecting inflation to rise from 4.2 % to 4.6% in the second half.

Pay Hike for Government employees, rising crude oil prices also increase inflation.If food prices, commodities prices come down then change in rate cuts also may take place as per in future asper governor .RBI reduced the Statutory Liquidity Ratio (SLR).The deposits the banks have to keep in government bonds is called SLR. This has been lowered from 20 % to 19.5 % . and this credit demand increases banks will have more capacity for banks to lend.

The Monetary Policy Committee (MPC) felt that the GST affected short-term prospects and investment activity.The government also noted the downward trend of growth and the upward trend of inflation.Bankers are optimistic about future position.