ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Growth versus Inflation

The Reserve Bank of India has at last reduced its discount rate at which it repurchases government securities from the commercial banks, the repo rate. The reduction, however, has been very small and has come very late. In pursuit of a notion of central bank independence, the RBI has taken steps that have contributed to a decline in investment and a slowdown in growth. It is time the central bank accepts once again that one of its main roles is to maintain the fl ow of credit to the productive sectors.

Declining Household Savings

After touching a high in 2007-08, total domestic savings have declined. Savings of the household sector have started falling more recently. What are the reasons for this decline?

Monetary Policy

A critical discussion of the Reserve Bank of India's Annual Report for 2011-12, which continues to be the central bank's major channel of communication for airing its views on policy. Alongside, a discussion of the monetary policy statement of 17 September.

External Account

There are dark clouds on the external sector front. The current account defi cit touched its widest ever level in 2011-12, foreign exchange reserves are increasingly providing import cover for a shorter and shorter period and the ratio of volatile capital to reserves is rising.

The Slow-down in Services

Too much is being made of the marginal acceleration in growth during the fi rst quarter (April-June) of 2012-13. What should worry us is the steady slowdown in services, which has now touched a new. Services have fuelled GDP growth in recent years, but they cannot indefi nitely sustain a growth acceleration nor can export demand by itself hold up services. The service sector depends on the industrial and agricultural sectors, where growth has slowed because of the decline in investment growth.

Pattern of Consumer Expenditure in India

A first analysis of the summary results from the National Sample Survey Offi ce's 2011-12 consumer expenditure survey throws up some interesting results. The monthly per capita expenditure shows an accelerated growth across all deciles. However, expenditure inequality has widened in both rural and urban areas. A study of the "drought effect" in 2009-10 by using information from the 2004-05, 2009-10 and 2011-12 surveys suggests that the impact of the drought on the rural poor may have been softened by government programmes, while the urban poor were less fortunate that year.

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