The Monetary Policy Committee is entrusted with the responsibility of deciding the different policy rates including MSF, Repo Rate, Reverse Repo Rate, and Liquidity Adjustment Facility. Monetary Policy Committee (MPC) has six members and the main objective of this body is to maintain price stability and boost up the growth rate of the country’s economy.
The MPC also maintained an accommodative stance “as long as necessary to sustain growth on a durable basis” and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward
The RBI MPC decided to keep the repo rate unchanged at 4 percent on the back of rising COVID-19 cases, imposition of restrictions, and lockdown in the state of Maharashtra. The reverse repo rate remained changed at 3.35 percent and the marginal standing facility (MSF) rate and the bank rate at 4.25 percent. The projection of real GDP growth for FY22 is retained at 10.5 percent because of the ongoing vaccination program, the gradual release of pent-up demand, and the investment-enhancing and growth-supportive reform measures taken by the government
The Government Security Acquisition Programme GSAP will reduce some of the uncertainties created by long-term bonds. It is very simple to understand that the Government wants to acquire high yield long-term bonds to reduce the debt burden for a longer period of time and also this will help to pump into the ecosystem.
Related Article: Rules that will knock your pocket from 1st April 2021
RBI has extended NEFT and RTGS facilities to non-bank payment system operators. So far, only banks were allowed to use these facilities. With RBI’s announcements, prepaid payment instrument (PPI) issuers, card networks, White label ATM operators, and Trade Receivables Discounting System (TReDS) platforms can also use these facilities. Also in an attempt to promote digital transactions, RBI has proposed to increase the limit of the outstanding balance to Rs 2L from Rs. 1L
In order to maintain Liquidity RBI Governor announced liquidity support of Rs 50,000 crore for fresh lending during 2021-22. RBI will provide Rs 25,000 crore to Nabard (National Bank for Agriculture and Rural Development); Rs 10,000 crore to National Housing Bank (NHB); and Rs 15,000 crore to Sidbi (Small Industries Development Bank of India).
The entire RBI Monetary policy indicates that the Government is focusing on maintaining liquidity that seems necessary for economic activity. It is striving to keep the cost of funds low by anchoring bond yields. These measures are aimed at keeping financial conditions agreeable, ensure orderly evolution of the yield curve and support the ongoing recovery.
Will tax on PF interest also cover contribution to PPF account?
Budget 2021 has proposed to levy income tax on interest earned by an employee/person on his/her contribution in excess of Rs 2.5 lakh in a financial year to a provident fund. It appears that tax will apply to the interest earned on contributions made to Employees’ Provident Fund (EPF), Voluntary Provident Fund (VPF) as well as Public Provident Fund (PPF). However, tax experts have clarified that there are separate limits for EPF/VPF and PPF i.e. contributions to PPF and EPF/VPF will not be aggregated for the purpose of calculating the Rs 2.5 lakh limit.
RBI has announced monetary policy today
Repo Rate: 4%
Reverse Repo Rate: 3.35%
The Monetary Policy Committee (MPC) decided to continue with the accommodative stance as long as necessary – at least during the current financial year and into the next financial year
Reasons for no change in rates:
- To revive growth on a durable basis and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.
- Concerns around core inflation coupled with widening fiscal deficit and normalization of economic activities.
- Also to normalize liquidity and drain out the surplus funds from the market.
Petrol, diesel price at fresh high; oil company says only tax cut by government can help
Petrol and diesel price was hiked by 35 paise per litre each after a gap of a week. The increase took petrol prices to a fresh high of Rs 86.65 a litre in Delhi and to Rs 93.20 in Mumbai. Diesel rates touched Rs 76.83 in Mumbai and an all-time high of Rs 83.67.
Reasons behind increase in petrol and diesel prices:
- There has been a sudden spike in international oil prices to USD 59 per barrel in the last 2-3 days because of a perception of mismatch in demand and supply as well as cut in production by Saudi.
- Addition of central and state taxes and dealer commission to the benchmark cost of production.
Tata Power Q3 results: Net profit up 22% to Rs 318 cr on debt reduction
Tata Power on Thursday reported a 22 percent year-on-year increase in consolidated net profit for the October-December quarter at Rs 318 crore on debt reduction, better performance of the Mundra plant, and steady operational performance across all businesses.
The company’s revenue rose 7.5 percent to Rs 7,598 crore during the December quarter. Earnings before interest, tax, depreciation, and amortization (EBITDA) rose 1 percent to Rs 1,997 crore from Rs 1,970 crore in the year-ago quarter.
The company has marked a new milestone for its distribution business by acquiring the distribution and retail supply of electricity in Odisha’s five circles of WESCO and six circles of SOUTHCO.
The company is bullish on its renewables business and said its solar engineering, procurement, and construction (EPC) business continues to grow.
FM Nirmala Sitharaman sets Rs 15 lakh income cap to tax NRIs
The Finance Minister has put in place a threshold of Rs 15 lakh for the levy of tax on incomes emerging from India while leaving out global incomes from the tax ambit.