Post-Budget 2019, focus on monetary policy panel's first meet on repo rate, CRR

After the massive giveaways to farmers and major tax rebate to the middle class in the interim Budget 2019, all eyes are on the first meeting of Monetary Policy Committee to see if there will be any downward revision of the repo rate and CRR to ease pressure on banks. This will be the first meeting (February 4-6) of the MPC chaired by new Reserve Bank of India (RBI) governor Shaktikanta Das. 

The government has gone for the popular measures in an election year to win over distressed sections of the society, but the move will have to be synchronized with the necessary monetary policy balancing. "This is a largely populist Budget as it attempts to address apprehensions on expected revenue shortfall, especially the GST collection which has not met expected targets. The government has thus resorted to traversing the path of electoral populism over fiscal discipline," said Mahesh Singh, founder and managing director of Singhi Advisors. 

Finance minister Piyush Goyal said in his Budget speech that the government had controlled the double-digit inflation and kept it under check at 4.6 per cent.  The RBI has also revised the retail inflation target to 2.7 to 3.2 per cent for the second half of the current fiscal in anticipation of normal monsoon moderating food prices. 

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The industry leaders have given thumbs-up to the Budget.  Harsh Pati Singhania, director JK Organisation, said the Budget was presented in the backdrop of the two major issues: agrarian distress and demand slowdown, and the Budget has tried to address both.  "Around 20 crore families have been directly addressed in this Budget, which no doubt should provide a consumption boost to the economy. What is laudable is that the higher sops and outlays were provided without additional levies on corporate and high income earners, and without any significant breach on the fiscal front," he said.