Hope of a rate cut

Last Updated: Mon, Jan 28, 2013 20:11 hrs

In its monetary and macroeconomic development report, RBI has raised hopes of a rate cut but also flagged some challenges




  • Economic growth in 2012-13 might fall below the projected 5.8%



  • The inflation rate might moderate to under the projected 7.5% but suppressed inflation risk would persist over 2013-14



  • The average Wholesale Price Index (WPI) -based inflation might moderate from 7.5% in 2012-13 to 7% in 2013-14.



  • The inflation path over 2013-14 might face downward rigidity



  • After a record high of 5.4% of gross domestic product in the second quarter, the current account deficit might further widen in the third



  • A likely significant shortfall in tax revenue could prove a challenge in meeting the fiscal deficit target for the financial year



  • The government’s policy initiatives are yet to fully show up; economic revival, therefore, might take more time



  • Corporate sales growth has moderated further in the second quarter of 2012-13, to its lowest in three years but corporate net profit growth has shown a marked improvement


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