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Even as several non-BJP ruled states like Rajasthan, Chhattisgarh, Himachal Pradesh, Punjab and <keyword id="6360371" type="General" weightage="80" keywordseo="jharkhand" source="Orion">Jharkhand</keyword> have started implementing the old pension scheme, the Reserve Bank of India (<keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword>) has cautioned that it would add to the financial burden of the states. In its report titled "State Finances: A Study of Budgets of 2022-23", the central bank has said that the move is a major risk to the "subnational fiscal horizon" and may lead to the accumulation of unfunded liabilities in the years to come. "A major risk looming large on the subnational fiscal horizon is the likely reversion to the old pension scheme by some states. The annual saving in fiscal resources that this move entails is short-lived," the RBI report said. By postponing the current expenses to the future, the report said states risk the accumulation of unfunded pension liabilities in the coming years. The governments of Rajasthan, Chhattisgarh, Himachal Pradesh, Punjab and Jharkhand have informed the Centre about their decision to implement the old pension scheme, which they had promised to do in their election manifestos. The decision by these states has led to a political tussle between non-BJP and BJP-ruled states. Incidentally it was the BJP-led NDA government, which in 2004, had done away with the old pension scheme from April 1, 2004 onwards. In its place, the government had introduced the National Pension Scheme, (NPS), under which government employees contribute 10 per cent of their basic salary towards their pension while the government contributes 14 per cent. The private sector was also included under the NPS system. Under the old pension scheme, retired government employees received 50 per cent of their last drawn salary as monthly pension, and the amount kept increasing with the hike in the DA rates. The old pension regime is not fiscally sustainable as it is not contributory in nature and the burden on the exchequer keeps on mounting, experts have said. Even former RBI governor <keyword id="46742" type="General" weightage="50" keywordseo="d-subbarao" source="Orion">D Subbarao</keyword> had spoken about the negative effects of the old pension scheme recently. "In a country where the large majority of the people have no social safety net, government servants with an assured pension are a privileged lot. Privileging them even further at the cost of the larger public will be morally wrong and fiscally detrimental," he had said. Subbarao had cautioned that if state governments revert to a "pay as you go" pension scheme, the burden of pensions will fall on current revenues, which in turn means foregoing schools, hospitals, roads and irrigation. SEE ALSO: <a href="https://www.businessinsider.in/business/corporates/news/britannias-q4-net-profit-rises-47-yoy-to-559-crore-on-softer-input-costs/articleshow/100017366.cms">Britannia’s Q4 net profit rises 47% YoY to ₹559 crore on softer input costs</a> <a href="https://www.businessinsider.in/business/news/indigo-airlines-stock-to-surge-further-as-go-firsts-troubles-mount/articleshow/100009541.cms">The skies are clearer for IndiGo stock to surge further as Go First’s troubles mount</a> <a href="https://www.businessinsider.in/finance/banks/news/raghuram-rajan-speaks-out-on-zombie-companies-a-simmering-real-estate-time-bomb-more/slidelist/100014762.cms">Raghuram Rajan speaks out on zombie companies, a simmering real estate time bomb &amp; more</a>

RBI sounds note of caution on OPS, says it may add to liabilities in future

<ul><li>An overall growth of 150% was recorded in the payments/salaries to gig workers between October 2021 and September 2022. </li><li>The potential of gig workers can grow further if online retail grows across the country. </li><li>The report predicts that the penetration of online retail was just 5% in 2019 and is expected to grow to 11% by 2024.</li></ul>As more e-commerce platforms enter the 10-minute delivery space, demand for gig workers has not only ballooned – but their monthly earnings have increased too. A report by StrideOne, a tech-enabled NBFC, titled ‘The Startup Economy Report 2022’ says that 25% of gig workers surveyed reported an over 50% rise in their monthly income as compared to their previous mode of livelihood – in the last one year. An overall growth of 150% was recorded in the payments/salaries to gig workers between October 2021 and September 2022, the report said. Majority of the gig workers are engaged in retail trade and sales which includes fast commerce like food and beverage, grocery, medicines delivery etc. Around 56% of the gig workers surveyed previously had full-time employment. “Startups are limiting their hiring of permanent employees. Gig workers have begun to replace these permanent employees,” the report said. The number of companies who shifted to a semi-gig workforce model has increased by 15% since October 2021. The potential of gig workers can grow if online retail expands across the country. The report predicts that the penetration of online retail was 5% in 2019, and is expected to grow to 11% by 2024. Non-farm sectors of <keyword id="3658" type="General" weightage="80" keywordseo="india" source="Orion">India</keyword> have the potential to add over 90 million gig jobs in the longer term, the report predicts. As of now, the <keyword id="3080230" type="General" weightage="20" keywordseo="gig-economy" source="Orion">gig economy</keyword> constitutes 1.5% of the total workforce in India and is expected to expand to 23.5 million by 2024 constituting 4% of the workforce. <cmsannotation type="cmsannotation" annotationid="Startup ecosystem of India" comment="subhead" text="Startup ecosystem of India"><keyword id="15794501" type="General" weightage="20" keywordseo="startup-ecosystem-of-India" source="Orion">Startup ecosystem of India</keyword></cmsannotation> The number of jobs created by the startup ecosystem of India, which is said to be the third largest in the world, grew by 78% CAGR between 2017 and 2022. It is further projected to grow at a CAGR of 24% from 2022-27. The ecosystem altogether created over 2 lakh jobs this year, according to the report. However, several startups like Byju’s, Udaan laid off several employees from its workforce as a part of their retrenchment due to funding winter. “The rapid growth phase and maturity of the ecosystem have unlocked tremendous appetite for scalability, alternate funding options, expansion into the global market and the capacity to enable millions of jobs. This meteoric rise of startups has made India the third largest startup ecosystem in the world and has significantly impacted the Indian economy showcasing the ability to contribute approximately 4-5% to the gross domestic product (GDP) of India,” said Ishpreet Singh Gandhi, founder, StrideOne. Sectors like textile, apparel and logistics however retain the title of being the biggest job creators in the country. The textile industry is said to be the second largest employer in India, which has given direct employment to 5 crore people, and 10 crore people in allied industries. Whereas, logistics sector currently employs 22 million people and is estimated to contribute 11% to the overall GDP of the country. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/indian-railways-backed-spacetech-startup-galaxeye-raises-3-5-million-in-seed-round/articleshow/96250010.cms">Indian Railways backed spacetech startup GalaxEye raises $3.5 million in seed round</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/will-be-lucky-if-we-grow-5-next-year-says-former-rbi-governor-raghuram-rajan/articleshow/96249572.cms">Will be lucky if we grow 5% next year says former RBI governor Raghuram Rajan</a>

A quarter of Indian gig workers’ salaries grew by 50% in the last one year

<a href="http://www.businessinsider.in/searchresult.cms?query=raghuram+rajan&amp;sortorder=effectivedate">Raghuram Rajan</a>, the governor of the <a href="http://www.businessinsider.in/searchresult.cms?query=RBI&amp;sortorder=effectivedate">Reserve Bank of India</a> holds an esteemed position and it’s a given that he is bound to enjoy a whole lot of perks. 
 
For starters, the greatest perk enjoyed by him is the fact that he gets to have signature across all currency notes in the country. Yeah, pretty cool, right? 
 
 
 
There’s more. As the <a href="http://www.businessinsider.in/searchresult.cms?query=RBI+governor&amp;sortorder=effectivedate">RBI Governor</a>, he is also entitled to use a colonial bungalow on Carmicheal Road, a posh street that weaves along a ridge across South Mumbai- living opposite India’s richest industrialists. 
 But, arguably the greatest disadavnatge of the position of a <keyword id="64190" type="POSITION" weightage="100" keywordseo="RBI-Governor">RBI Governor</keyword> is the salary attached to it. 
 As the governor of the RBI, <keyword id="6358908" type="PERSON" weightage="100" keywordseo="Raghuram-Rajan">Raghuram Rajan</keyword> draws the same pay and perks as are drawn by the Cabinet Secretary to the Government of India. 
 
This basically means, he is ranked at par with the highest civil servant in the country, though logically, his office in reality can be considered as the true Deputy Finance Minister of the Country. 
 
As of June 30, 2015, Rajan drew a salary of Rs 1.98 lakh per month. That’s not much considering there are IIM graduates earning way more than that. 
 
The salary mentioned above is due for revision as well, as has been stated by the RBI.

This is how much Raghuram Rajan earns as the RBI Governor

RBI Governor <keyword id="6375119" type="UNKNOWN" weightage="20" keywordseo="Urjit-Patel">Urjit Patel</keyword> gets a little over Rs 2 lakh as salary and has not been provided with any supporting staff at his residence, the central bank has told an agency. 
 <keyword id="6362344" type="PERSON" weightage="20" keywordseo="Patel">Patel</keyword>, who took over as RBI Governor in September, is presently in possession of the bank's flat (Deputy Governor's flat) at Mumbai, it said. "No suppo<keyword id="6356198" type="ORGANIZATION" weightage="20" keywordseo="RTI">rti</keyword>ng staff has been provided to the present Governor, Urjit Patel at his residence. Two cars and two drivers have been provided to the present Governor," RBI said in reply to an RTI query. 
 The bank was asked to provide details of remuneration given to former RBI Governor <keyword id="6358908" type="PERSON" weightage="20" keywordseo="Raghuram-Rajan">Raghuram Rajan</keyword> and incumbent Patel. 
 For the month of October -- the first full month Patel was in office as Governor -- Patel got Rs 2.09 lakh as his salary, the same amount drawn by <keyword id="6355561" type="PERSON" weightage="20" keywordseo="Rajan">Rajan</keyword> as his August's salary. Rajan demitted office on September 4, and was given Rs 27,933 as remuneration for four days. 
 
Rajan assumed the charge of RBI Governor from September 5, 2013 at a monthly salary of Rs 1.69 lakh. His salary was revised to Rs 1.78 lakh and Rs 1.87 lakh respectively during 2014 and March 2015. His salary was hiked to Rs 2.09 lakh from Rs 2.04 lakh in January this year, the RTI reply said. 
 
Rajan was provided with three cars and four drivers. "One caretaker and nine maintenance attendants were posted as supporting staff in the bungalow provided by the bank to the former Governor Raghuram Rajan at Mumbai," RBI said. 
 
The Centre has recently declined to share details on appointment of Patel and other candidates shortlisted for the top post in the central bank saying these are "cabinet papers" and cannot be made public. 
 
Patel was on August 20 named as RBI's Governor to succeed Rajan.

Here’s the monthly
salary of RBI governor Urjit Patel

RBI Governor <keyword id="6375119" type="UNKNOWN" weightage="100" keywordseo="Urjit-Patel">Urjit Patel</keyword> and his deputies have got a big pay hike with the government more than doubling their basic salary to Rs 2.5 lakh and Rs 2.25 lakh per month, respectively, according to a news report by <keyword id="6367495" type="COMPANY" weightage="20" keywordseo="PTI">PTI</keyword>. 
 
 
The "basic pay of the Governor and Deputy Governors" has been revised retrospectively with effect from January 1, 2016 and marks a huge jump from Rs 90,000 basic pay so far drawn by the Governor and Rs 80,000 for his deputies. 
 
Still, their salaries are much lower than the top executives of various banks regulated by the RBI. 
 The monthly emoluments of these top RBI officials include 'basic pay', dearness allowance and 'other payments', which totalled Rs 2,09,500 in case of <keyword id="6362344" type="PERSON" weightage="20" keywordseo="Patel">Patel</keyword> as on November 30, 2016, as per the latest information disclosed on the RBI website. 
 In response to a query by PTI under the Right to Information (<keyword id="6356198" type="ORGANIZATION" weightage="20" keywordseo="RTI">RTI</keyword>) Act, the central bank has now disclosed that as per a <keyword id="47209" type="ORGANIZATION" weightage="20" keywordseo="Finance-Ministry">Finance Ministry</keyword> communication, dated February 21, the basic pay of the Governor and Deputy Governors have been revised. 
 
Following the revision, the basic pay of the Governor stands increased to Rs 2,50,000 per month while the same for a Deputy Governor would be Rs 2,25,000, RBI said. 
 
The pay hike is "with effect from January 1, 2016". 
 
Dearness Allowance would be notified by the central government from time to time while "all other allowances (are) to be paid at existing rates as if the pay has not been received with effect from January 1, 2016," the RTI reply said. 
 
The RBI, however, did not disclose the new gross pay for Patel and his deputies following the revision in basic pay. 
 
With the earlier basic pay of Rs 90,000, Patel got a DA of Rs 1,12,500 and 'other payments' of Rs 7,000 -- totalling to a gross pay of Rs 2,09,500. The increase in the basic itself would take his gross pay to nearly Rs 3.70 lakh. 
 Patel, who took over the reins of the central bank in September 2016, had received a salary of Rs 2.09 lakh in October -- the first full month in office. This amount was same as drawn by his predecessor <keyword id="6358908" type="PERSON" weightage="20" keywordseo="Raghuram-Rajan">Raghuram Rajan</keyword> in August that year. 
 <keyword id="6355561" type="PERSON" weightage="20" keywordseo="Rajan">Rajan</keyword> assumed RBI governorship from September 5, 2013 at a monthly salary of Rs 1.69 lakh. His salary was revised to Rs 1.78 lakh and Rs 1.87 lakh respectively during 2014 and March 2015. His salary was raised to Rs 2.09 lakh from Rs 2.04 lakh in January 2016. 
 
It was not clear whether Rajan, who left RBI on September 4, 2016, would be eligible for arrears as the basic pay for Governor has been revised retrospectively while covering little more than nine months of his tenure. 
 Currently, RBI has four deputy governors -- R Gandhi, S S <keyword id="66822" type="CITY" weightage="20" keywordseo="Mundra">Mundra</keyword>, N S <keyword id="260413" type="PERSON" weightage="20" keywordseo="Vishwanathan">Vishwanathan</keyword> and Viral V Acharya. 
 
At the end of November last year, Gandhi, Mundra and Vishwanathan were taking home a basic pay of Rs 80,000 per month. Acharya took charge in January this year.

Here’s how much RBI governor
Urjit Patel will earn now after salary hike

<keyword id="1895647" type="ORGANIZATION" weightage="20" keywordseo="RBI-Governor-Raghuram-Rajan">RBI Governor Raghuram Rajan</keyword> spelled out his reasons for not slashing the repo rate and CRR. However, he kept the ball rolling in <keyword id="6391015" type="UNKNOWN" weightage="20" keywordseo="Finance-Minister-Arun-Jaitley">Finance Minister Arun Jaitley</keyword>’s court, saying the <keyword id="6360189" type="COMPANY" weightage="20" keywordseo="Union-Budget">Union budget</keyword> will have to do the real reformatory easing. 
 
While announcing the bi-monthly policy, Rajan sounded off alarm bells, hinting that the growth trajectory will not see much momentum before FY17. As we have just begun with the year, this means that momentum in growth will be seen only by the end of two years. 
 
Rajan said the current pace of growth did not meet expectations over the medium term, adding the RBI was being ‘accommodative’. 
 
Here are few factors that RBI hinted at: 
 1. Rajan said the Union Budget, which will be announced on February 29, should announce structural reforms and keep a tight control on spending. He added that the government will have to announce measures to ensure that the <keyword id="22195" type="COMPANY" weightage="20" keywordseo="Inflation">inflation</keyword> remains on the set path of 5% by the end of 2016-17. 
 2. Don’t expect any further cuts in tax slabs and more subsidies from the <keyword id="2783177" type="UNKNOWN" weightage="20" keywordseo="Budget-2016">Budget 2016</keyword>. One of the primary ways in which the government can control its expenditures is by being wise about the pay panel recommendations. “How the government implements a planned 24 percent pay hike in salaries and pensions for some 10 million current and former government employees will also be key in determining the path of inflation,” said Rajan. 
 
3. The RBI is also hoping for good monsoons this year as this is also one of the key factors for strengthening growth. After two consecutive years of bad monsoons, Rajan said if the country receives good monsoon, it will increase trade and household incomes. However, an El Nino effect may be seen. 
 
4. While there are rounds of liquidity crunch in the banking system, Rajan said the central bank will use all methods possible to pump in money in the bank. Rajan ditched the perception of a liquidity crunch. The RBI governor has been pushing banks to clear their bad debts in order to have more money to loan, which will lead to propel investments and lead to clearing of stalled infrastructure projects. 
 
5. There has to be a revival in private investment for a higher growth trajectory and it is needed for the government to pay heed to the fiscal deficit. 
 
(Image: Indiatimes)

RBI’s Rajan is sounding off alarm bells for the economy asking the govt to announce a path-changing Budget 2016

The <a href="http://www.businessinsider.in/searchresult.cms?query=RBI">Reserve Bank of India</a> on Wednesday gave the go-ahead to a total of 11 companies for setting up <a href="http://www.businessinsider.in/searchresult.cms?query=payment+banks">payment banks</a>. The ‘in-principle’ approval given to these companies is valid for three years, after which they stand a chance to get a license, provided they fulfill all the conditions listed down by the <keyword id="30067" type="ORGANIZATION" weightage="80" keywordseo="RBI">RBI</keyword>. 
 
With the list of the 11 successful applicants including big players such as <a href="http://www.businessinsider.in/searchresult.cms?query=Reliance+Industries">Reliance Industries</a>, <a href="http://www.businessinsider.in/searchresult.cms?query=Bharti+Airtel">Bharti Airtel</a>, <a href="http://www.businessinsider.in/searchresult.cms?query=Vodafone+India">Vodafone India</a>, Idea Cellular and the country’s postal service, <keyword id="2419127" type="UNKNOWN" weightage="80" keywordseo="payment-banks">payment banks</keyword> are touted to be revolutionize the <keyword id="417932" type="ORGANIZATION" weightage="80" keywordseo="Indian-Banking">Indian banking</keyword> sector, especially after the RBI announced that the entities who were unable to qualify for this round could well be successful in future rounds. 
 
To make the concept of ‘payment banks’ a tad bit familiar and simpler, we at Business Insider break down its salient features into digestible bites and answer any questions our readers might have. 
 
1. What are Payment banks? 
Payment banks will essentially be set up as differentiated banks which will be able to open current and savings accounts and perform every activity that a regular bank does. Thus, one can pay bills, make deposits of upto a maximum of Rs 1 lakh and enjoy interests on them, issue cheques and drafts through these banks. They can also offer services like remittance and distribute financial products such as insurance and mutual funds. Individuals can make daily or monthly cash transactions either through debit card or through their mobile. 
 
2. How are payment banks different from regular banks? 
Unlike regular banks, the only activity that payment banks will be unable to perform is to offer people loans or credit cards. They can only lend to the government, which evidently makes them the safest of banks as they only has the government as a borrower, who would not default in payments. However, what it can offer are debit cards and ATM cards, which will work in all banks’ machines. 
 
3. Who can open an account in a payment bank? 
Anyone can open an account in a payment bank, even people who have salary accounts in regular banks. This is because there is no restriction on the income levels of anyone who wishes to open an account in payment banks. 
 
4. Who can set up a payment bank? 
The minimum capital needed to set up a payment bank is set at Rs 100 crore, so anyone with that much capital, who adheres to the guidelines laid down by the RBI qualifies to get a license in order to set up payment banks. The payment bank will however need to invest 75% of its fund in government securities. 
 
5. What are the advantages of payment banks? 
Payment banks are not being considered revolutionary for the banking sector for no reason. It does have its set of advantages intended to make life very much simpler. 
 
 Firstly, payment banks will pave the way for mobile banking, which in turn will herald a new era of cash-less banking. This effectively means that over a period of time, the need for too many cash payments will die down as mobiles will end up performing the same functions as credit cards or debit cards 
 
Secondly, payment banks will bridge miles between bank branches and a customer living in rural locations, through the mobile phone and will reach to people residing in villages. Mobiles will substitute ATMs and also act as a cheque-book for small payments. The physical presence of an ATM branch will be not considered necessary to a great extent due to these banks. 
 
And, lastly payment banks will be beneficial to both the government and a customer. It will provide high interests to the customer, while the government can expect to borrow more cheaply with a reduction of short-term rates due to the steep impact of additional money coming into payment banks which can only be invested in government securities. 
 
Image Credit: Indiatimes

Five things to know about payment banks

The ongoing slump in the <keyword id="6354553" type="COMPANY" weightage="20" keywordseo="real-estate">real estate</keyword> market may soon be a thing of the past as banks like <a href="http://www.businessinsider.in/searchresult.cms?query=ICICI">ICICI</a>, <a href="http://www.businessinsider.in/searchresult.cms?query=SBI">State Bank of India</a>, <a href="http://www.businessinsider.in/searchresult.cms?query=HDFC">HDFC</a>, etc have cut rates, after the <a href="http://www.businessinsider.in/BREAKING-NEWS-RBI-cuts-repo-rates-by-50-basis-points-CRR-unchanged/articleshow/49148486.cms">RBI</a> also reduced repo rate by 50 basis points. 
 
As the lenders lowered the rates, <a href="http://www.businessinsider.in/searchresult.cms?query=real+estate">real estate</a> experts said this would fuel the demand and will in turn also push government’s plan of affordable housing and smart cities. 
 
READ ALSO: <a href="http://www.businessinsider.in/Axis-Bank-reduces-its-base-rate-by-35-basis-points-to-9-50/articleshow/49166966.cms">Axis Bank reduces its base rate by 35 basis points to 9.50%</a> 
 
The rate reductions by banks are between 15 basis points and 35 bps. SBI is now giving <a href="http://www.businessinsider.in/10-tips-to-get-the-best-home-loan-offer/articleshow/47734735.cms">home loans</a> at 9.55%, whereas HDFC is offering them at 9.65%. Meanwhile, <keyword id="6653" type="CITY" weightage="20" keywordseo="ICICI-bank">ICICI Bank</keyword> also followed suit and lowered rates to 9.65% a year for loans up to Rs 5 crore for salaried professionals. 
 
For females, the loans will be 5 bps cheaper. 
 
"This is the trigger the market has been eagerly waiting for. We have already started seeing fresh interest from buyers. Many realtors in Mumbai have started rationalising prices. Companies that understand the right price and right location will see growth momentum,” said Sandeep Ahuja, chief executive of Mumbai-based Richa Realtors. 
 
Earlier, the RBI’s high rate policy had kept people away from buying property. 
 
In real estate sector, the volume dropped by 19% in H1 2015 compared to H1 2014. 
 
Realty industry contributes 6-7% to <a href="http://www.businessinsider.in/searchresult.cms?query=GDP">GDP</a> and any movement is going to help the entire economy. 
 
(Image: Thinkstock)

Banks are finally hearing Raghuram Rajan’s plea! Cheap homes finally a reality

New Delhi, Apr 5 () Former RBI governor Raghuram Rajan has suggested to the government to call people with proven expertise and capabilities, including from opposition parties, to deal with perhaps the greatest emergency being faced by the country since Independence following the coronavirus outbreak.He also cautioned that driving everything from the Prime Minister's Office, with the same overworked people, may not be of much help."There is much to do. The government should call on people with proven expertise and capabilities, of whom there are so many in India, to help it manage its response. It may even want to reach across the political aisle to draw in members of the opposition who have had experience in previous times of great stress like the global financial crisis."If, however, the government insists on driving everything from the Prime Minister's Office, with the same overworked people, it will do too little, too late," Rajan said in a blog titled "Perhaps India's Greatest Challenge in Recent Times".He said economically, India is probably facing its greatest emergency since Independence."The global financial crisis in 2008-09 was a massive demand shock, but our workers could still go to work, our firms were coming off years of strong growth, our financial system was largely sound, and our government finances were healthy. "None of this is true today as we fight the coronavirus pandemic," Rajan, who completed his three-year term at the Reserve Bank of India (RBI) in 2016, noted.He, however, asserted that with the right resolve and priorities, and drawing on India's many sources of strength, it can beat this virus back, and even set the stage for a much more hopeful tomorrow.Laying out steps the country could take to recover from the economic effects of the COVID-19 outbreak, Rajan said the immediate priority is to suppress the spread of the pandemic through widespread testing, rigorous quarantines and social distancing."The 21-day lockdown is a first step, which buys India time to improve its preparedness. The government is drawing on our courageous medical personnel and looking to all possible resources -- public, private, defence, retired -- for the fight, but it has to ramp up the pace manifold," he said, adding that the country will have to significantly increase the number of COVID-19 tests to reduce the fog of uncertainty as regards where the hotspots are.Rajan, a professor of finance at the University of Chicago Booth School of Business, suggested that India should now plan for what happens after the lockdown, if the virus is not defeated."It will be hard to lock down the country entirely for much longer periods, so we should also be thinking of how we can restart certain activities in certain low-infection regions with adequate precautions," he said.Healthy youngsters, lodged with appropriate distancing in hostels near the workplace, may be the ideal workers for restarting such activities, Rajan pointed out.Noting that in the meantime, India obviously needs to ensure that the poor and non-salaried lower-middle class, who are prevented from working for longer periods, can survive, he said, "Direct transfers to households may reach most but not all, as a number of commentators have pointed out, and the quantum of transfers seems inadequate to see a household through a month."The country is under a 21-day lockdown as part of larger efforts to curb the spread of the coronavirus.Several international agencies have cut in their growth estimates for India in recent days on concerns about the fallout of the COVID-19 outbreak.According to Fitch Ratings, India may post a two-per cent GDP growth in 2020-21, the slowest since the economy was liberalised 30 years ago.The Asian Development Bank (ADB) sees India's economic growth slipping to four per cent in the current fiscal (April, 2020 to March, 2021), while S&amp;P Global Ratings last week further slashed its GDP growth forecast for the country to 3.5 per cent from a previous downgrade of 5.2 per cent.Moody's Investors Service has also slashed its estimate of India's GDP growth during the 2020 calendar year to 2.5 per cent from an earlier estimate of 5.3 per cent and said the coronavirus pandemic will cause an unprecedented shock to the global economy. BKS CS RC

Rajan urges govt to invite experts to deal with economic impact of COVID-19

Chartered Accountant and Editor of Tamil political magazine 'Thuglak' S. Gurumurthy said he was pressurised to take up the board position in the <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (<keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword>). Gurumurthy told this in an email to the All India Bank Employees Association (AIBEA) General Secretary C.H. <keyword id="215998" type="General" weightage="50" keywordseo="venkatachalam" source="Orion">Venkatachalam</keyword> and also dared the latter to share the mail with the <keyword id="6357801" type="General" weightage="50" keywordseo="union" source="Orion">Union</keyword> members. As a post script in his email, Gurumurthy told Venkatachalam: "You all think that me being in the <keyword id="370514" type="General" weightage="80" keywordseo="rbi-board" source="Orion">RBI Board</keyword> is a big thing. I was pressurised to take up that position as there were not many to put a counter view in the RBI Board." "I did not need it nor did I seek it. For decades I had never taken any position in or from the government. Nor will I ever." "Me, in the RBI Board, was criticised by the Financial media in the West, and I am happy you a communist share their views now," Gurumurthy added. Continuing further. Gurumurthy said he had never allowed anyone in any public fora to state that he is on the RBI Board in the introductory remarks. "You have expressed grave concern about me being on the RBI Board. You may not know that if I am not on the RBI Board it makes very little difference to me," Gurumurthy said. Gurumurthy wrote to Venkatachalam in response to the latter's message in social media condemning him for his comments at Thuglak magazine's annual function about the public sector bankers. Speaking at the Thuglak magazine's annual function, Gurumurthy had said the public sector banks are losing talented officials to the private sector owing to poor pay and lack of freedom. "Only scums and filth are remaining with public sector banks and with them, the country has to compete globally in the financial sector," he had said. Gurumurthy also said that till the government has majority stakes in its banks, it is not possible to encourage talented staff. Reacting to that Venkatachalam said: "We strongly condemn his uncalled for comments and demand his immediate apology. He is unfit to be on the Board of RBI and the government should remove him from this important post." Gurumurthy in his email to Venkatachalam said: "I would not have written if I had not known you and you had not invited me for the AIBEA workshop. Your post has started a campaign against me." Stating that many campaigns were made against him earlier Gurumurthy said: "I have never bothered about the campaigns against me by any, as I don't belong to any party, nor seek or need anyone's courtesy, by the grace of the Divine I believe in. So this is not to answer any campaign." "I have always opposed and will continue to oppose privatisation as I believe with all faults majority bank assets in India have to be in state hands. The Indian economy will be ruined if the major part of the financial sector falls into private hands with the expansion and contraction of the <keyword id="6355302" type="General" weightage="50" keywordseo="rupee" source="Orion">Rupee</keyword> dependent on the Dollar," Gurumurthy said. "I resisted within RBI all efforts to pressure the government to privatise when the previous RBI governors were in command," he added. As regards his speech at the Thuglak magazine's function Gurumurthy said the UPA government's policies of letting huge FII investments into the stock market led to indigestible money in the system. To lend that money the government brought down the customs tariffs to zero for capital goods to attract the industrialists to borrow from banks. Gurumurthy said the government persuaded the industry to go for huge expansions in the hope that India would turn into a high growth export driven economy. According to Gurumurthy, the huge recession that followed 2008-09 made the investments of several lakhs of crore junk and the monies lent, NPA (non performing asset) and which was also later accepted by former Governor of RBI Raghuram Rajan. "That is where the woes of the PSBs (public sector bank) started. Not a single political party, including the BJP and CPI-M or the bank unions spoke the truth about the source of the NPA trouble. The guilty finance ministry officials who ran telbanking were mixed up with both the UPA and NDA governments, to suppress the truth," Gurumurthy said. Continuing further he said, the NPA issue, action against it by the Central Bureau of Investigation (CBI), Central Vigilance Commission (CVC), the prudential norms completely shook the bank officers. "This gave a huge opportunity to the private banks and funds which had a heyday because the best loan accounts shifted to them. They began giving high salaries and attracting capable PSB officers," Gurumurthy said. As a result, several capable officials left the PSBs and he had termed the remaining officials as 'kazhisadai' meaning leftovers or those who could not pass through the filter, remained inside. "It is a fact and I stand by it," Gurumurthy said. Referring to the decline in share of PSB loans in the total banking sector loans Gurumurthy said: "At this rate the PSBs need not be privatised. They will get so marginalised that they will handle only the government and municipal accounts and all corporate accounts will be taken over by private banks. That we are not having and not generating and training the needed talent in the PSBs to handle 60 per cent of national savings that gets into the PSB is indisputable. It is a matter of concern for all -- government included," he said. "If you are a responsible trade unionist you will be concerned, talk about this and not play petty politics. I wrote this because you had invited me to talk to AIBEA and you know our views converge on PSBs in many ways," Gurumurthy told Venkatachalam and also asked whether he has the guts to circulate his mail to AIBEA members. "I will not make this public unless you do it. If you do it, have the courage to publish it in full," Gurumurthy said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/politics/india/news/rising-dengue-cases-in-uttar-pradesh-put-health-officials-on-high-alert/articleshow/91611067.cms">Rising dengue cases in Uttar Pradesh put health officials on high alert</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/international/news/four-in-ten-american-users-thought-that-facebook-should-have-blocked-trump-sooner-reveal-leaked-internal-documents/articleshow/91610652.cms">Four in ten American users thought that Facebook should have blocked Trump sooner, reveal leaked internal documents</a>

Tamil magazine editor S. Gurumurthy 'pressurised' to take up RBI Board position

<ul><li><keyword id="7898399" type="UNKNOWN" weightage="20" keywordseo="muzamil-anwar">Muzamil Anwar</keyword>, an IIM Ahmedabad alumni wants to open an academy to train students for CAT examination. </li><li>Anwar is approaching Jammu and Kashmir government to set up the academy. </li><li>The IIM graduate secured an on campus job in Vedanta at an annual salary package of ₹30 lakhs.</li></ul>Muzamil Anwar, a 28-year-old IIM alumni is planning to approach the Jammu and Kashmir government to open an institute which will help students in <keyword id="6376114" type="LOCATION" weightage="20" keywordseo="Kargil">Kargil</keyword> prepare for <keyword id="58192" type="PERSON" weightage="20" keywordseo="Common-Admission-Test">Common Admission Test</keyword> (CAT), according to a TOI <a href="https://timesofindia.indiatimes.com/india/iim-alumnus-from-kargil-wants-to-train-jk-youngsters-for-cat/articleshow/70338045.cms">report</a>. Anwar lived in Kargil during the India-Pakistan war of 1999. He wants the students of Ladakh in Jammu and Kashmir to look beyond professional courses like engineering and MBBS. “I am thinking of approaching the J&amp;K government and setting up an academy to help young boys and girls pursue MBA,” he said. According to him, Kargil students are unaware of coaching institutes for MBA entrance exams. "I want to open an academy in Kargil to train kids to crack CAT,” he told The tImes of India. Anwar graduated from IIM Ahmedabad — one of the leading MBA institutes in India — said that he witnessed a cultural shift, moving from Kargil to Ahmedabad. He missed security forces on the roads. Anwar secured an on campus job in the metal and mining company Vedanta at an annual salary of ₹30 lakhs. He is currently handling the CSR (Corporate Social Responsibility) activities of the group, to promote football learning centres in Rajasthan and Goa. He is also assisting the company in training school kids in Football on <keyword id="93892" type="COMPANY" weightage="20" keywordseo="Astroturf">AstroTurf</keyword> — artificial playing surfaces. <a href="https://www.newsbytesapp.com/timeline/India/48725/222158/list-of-five-notable-alumni-of-iim-ahmedabad">IIM Ahmedabad</a> is the most sought after management institute across the country. Some of its alumni include former governor of RBI Raghuram Rajan, cricket commentator Harsha Bhogle and Deep Kalra, the founder of MakeMyTrip. See also: <a href="https://www.businessinsider.in/india-sees-a-50-jump-in-women-candidates-taking-the-cat-exam-for-entry-into-its-top-business-schools/articleshow/66823343.cms">India sees a 50% jump in women candidates taking the ‘CAT’ exam for entry into its top business schools</a> <a href="https://www.businessinsider.in/union-budget-2019-for-education-study-in-india-program-announced-by-nirmala-sitharaman/articleshow/70083474.cms">Study in India program to turn the country into an education hub for foreign students</a> <a href="https://www.businessinsider.in/niti-aayog-wants-education-budget-to-increase-further/articleshow/69941463.cms">India’s education budget has improved over the years — but it’s still too low</a>

This IIM alumni wants to coach students of war-hit Kargil crack CAT exam

<ul><li>The focus of the first set of announcements is to provide food and cash to the poorest of poor including farmers, unorganised labour, women, self-help groups., Finance Minister Nirmala Sitharaman said</li><li>The scheme has been called <keyword id="4290903" type="PERSON" weightage="20" keywordseo="Pradhan-Mantri-Gareeb-Kalyan-Yojana">Pradhan Mantri Gareeb Kalyan Yojana</keyword> will be with immediate effect. </li><li>The size of the entire package is ₹<a href="https://m.economictimes.com/markets/stocks/news/india-likely-to-unveil-20b-plus-economic-stimulus-package/articleshow/74820627.cms" data-type="tilCustomLink"></a>1.7 lakh crore, or over $22 billion, she added. </li><li><a href="https://www.businessinsider.in/searchresult.cms?query=coronavirus&amp;sortorder=effectivedate" data-type="tilCustomLink" target="_blank">Track the latest news and updates on the coronavirus pandemic on Business Insider India</a>.</li></ul>The Indian government led by Narendra Modi has announced a financial stimulus package of <a href="https://m.economictimes.com/markets/stocks/news/india-likely-to-unveil-20b-plus-economic-stimulus-package/articleshow/74820627.cms">₹1.7</a> lakh crore (over $22 billion), under the name of a scheme called the Pradhan Mantri Gareeb Kalyan Yojana, to cushion the Indian economy from the damning impact of the Coronavirus pandemic on the country's underprivileged and the poor, according to Reuters. “The lockdown was announced by the Prime Minister on the intervening night of March 24 and March 25 and it has been in force since then. The government has been working for the poor, the migrants, the women etc. of the society since then. It’s only been 36 hours since the lockdown was announced. The package will take care of their food requirement, and several measures through direct benefit transfer are being taken to put money in their hands,” the Finance Minister Nirmala Sitharaman said. However, she did not elaborate on the fiscal impact of the steps announced today or whether the government will fund these measures via additional government borrowing. Watch the full video here: 
 
 
 
 
 
 
 
 
 
 
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Courtesy: Press Information Bureau These are the highlights of the Finance Minister’s address on March 26: 1. The FM also announced a ₹50 lakh per person medical insurance cover for medical workers. “They are being called Gods in white costume,” she said lauding the efforts for everyone on the frontline including sanitation workers and paramedical staff, and Asha workers. This is targeted at 2 million individuals across the country. All the money to be transfered via Direct Benefit Transfer: 2. Pradhan Mantri Gareeb Kalyan Anna Yojana: Supply of foodgrain, either rice or wheat, to be doubled, and to be offered free of cost, for the next three months. Currently, they get either 5 kilograms of rice/wheat and they can get another 5 kgs after today's announcement. Aside from that, the government will also offer 1 kg of the preferred pulse, or dal, will also be given to every household free. This can be taken in 2 instalments by every household from the ration shops. 3. Farmers: Kisan Samman Nidhi, currently at ₹6,000 a year, will be frontloaded. Farmers will get the first instalment of ₹2,000 ahead of schedule on April 1. 4. Mahatma Gandhi National Rural Employment Guarantee Scheme: The wage rate will be increased to ₹202 a day from ₹182 a day currently and this will continue after the lockdown ends. This will benefit about 5 crore people across the country, increasing their income by ₹2,000 a year. 5. An ex-gratia of ₹1000 in the next three months will be given to to 300 million poor senior citizens, poor widows and poor disabled. This will be given in two installments. 6. 200 million women with Jan Dhan account holders will get ₹500 a month for the next three months. 7. Ujjwala Scheme (The government scheme gave subsidised cooking cylinders to poor households): Nearly 83 million people availing this scheme will get free cooking gas cylinders for the next three months. 8. Women self-help groups: The next announcement will help 6.3 million such groups, benefitting 70 million households. The collateral-free loans, under Deen Dayal Yojana, will be doubled to ₹20 lakh from ₹10 lakh currently. 9. For all firms with up to 100 employees (if 90% of the staff who earn less than ₹15,000 a month): The government will bear the employees' provident fund contribution, on behalf both the employers and the employees, together amounting 24% of the salary, for the next three months. 10. The Employee Provident Fund scheme will be amended to allow non-refundable advance up to 75% of the existing corpus in the individual's account, or three months' wages, whichever is lower. This is expected to benefit 8 million employees across 4 lakh companies. 11. The welfare fund for construction workers has about 3.5 crore registered people and a corpus of ₹31,000 crore. Many construction projects have come to a halt because of the lockdown. The central government will direct state governments to use the existing corpus to help this segment of workers. 12. The state governments will be requested to use the District Mineral Fund for medical screening, medical testing at the district level. This is a developing story and will be updated constantly. Keep refreshing the page. Earlier in the day, Reuters reported that Sitharaman may announce a financial stimulus package of <a href="https://m.economictimes.com/markets/stocks/news/india-likely-to-unveil-20b-plus-economic-stimulus-package/articleshow/74820627.cms">₹1.5 trillion</a> ($19.6 billion) today (Thursday). The CEO of government think tank NITI Aayog Amitabh Kant also batted for direct benefit transfer to those who lost their livelihoods due to the lockdown aimed at containing the virus. The last time she spoke on March 24, Sitharaman announced <a href="https://www.businessinsider.in/policy/economy/finance-minister-nirmala-sitharaman-speech-highlights-and-updates/articleshow/74789836.cms">some immediate steps</a> to reduce the burden of compliance and taxation on individuals and businesses of all sizes. Since then, the nationwide 21-day lock has resulted in industries coming to a halt as they figure out the logistics and <a href="https://www.businessinsider.in/india/news/a-sobbing-child-migrant-worker-stranded-in-delhi-without-shelter-job-and-a-way-back-home-is-only-one-among-lakhs-of-his-peers/articleshow/74823346.cms">millions of migrant workers</a> on the streets without a home or food. This is what some of the excerpts had recommended: The state’s first responsibility should be towards people who are at the margin and are going to lose their jobs, and should be able to provide them with a source of livelihood. And that should be in the form of a direct benefit transfer,” he said in a virtual interview with the Observer Research Foundation (<a href="https://www.youtube.com/watch?v=dGWsdvJBcgo&amp;feature=youtu.be">ORF</a>). The former governor of RBI Raghuram Rajan said that it is hard to assess the economic impact of the pandemic. However, he said that the government needs to put medical supplies etc on priority as it heads to contain the virus. "We need to spend money on medical supplies, ventilators, masks — on getting protective equipment for medical workers. That means getting every resource in. pvt, public, defence, retired — every resource. And quickly. All this will require fiscal resources and this is the higher priority," Rajan said in a TV interview. See also: <a href="https://www.businessinsider.in/india/news/a-sobbing-child-migrant-worker-stranded-in-delhi-without-shelter-job-and-a-way-back-home-is-only-one-among-lakhs-of-his-peers/articleshow/74823346.cms">A sobbing child migrant worker stranded in Delhi without shelter, job and a way back home — is only one among lakhs of his peers</a> <a href="https://www.businessinsider.in/policy/economy/news/what-narendra-modi-can-learn-from-donald-trump-2-trillion-stimulus-in-us/articleshow/74805256.cms" data-type="tilCustomLink" target="_blank">Inside the $2 trillion US economic stimulus⁠— and what locked-down India can learn from it</a> <a href="https://www.businessinsider.in/india/news/heres-what-india-want-from-modis-financial-package/articleshow/74795064.cmshttps://www.businessinsider.in/india/news/heres-what-india-want-from-modis-financial-package/articleshow/74795064.cms" data-type="tilCustomLink" target="_blank">Here's what India wants from Modi’s financial package</a> <a href="https://www.businessinsider.in/india/news/coronavirus-updates-in-india-and-steps-taken-by-narendra-modi-government/articleshow/74723667.cms" data-type="tilCustomLink" target="_blank">A look at Indian government response to coronavirus, so far, shows some quick reactions but not enough foresight</a>

India announces a $22 billion package including cash transfers to feed and serve the poor during the coronavirus lockdown

<ul><li>Myth 1: India’s household savings are strong enough.</li><li>Myth 2: Indians factor in inflation while choosing investments.</li><li>Myth 3: Further interest rate cuts will spur consumption and savings.</li></ul>The biggest myth of all myths in India is that a person may decide to buy a home or a car just because the <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (RBI) has cut interest rates by 25 basis points or 50 basis points. The fact is a person buys any discretionary item like a home or a car only when he or she has enough savings, borrowing capacity, and reasonable certainty about the future. Right now, Indian households are running short of all three as visible in the <a href="https://www.businessinsider.in/job-cuts-at-parle-and-britannia-sales-show-indian-economy-is-in-dire-straits/articleshow/70766429.cms">slowing sales of homes, cars, and even items of daily use</a>. Amidst rampant unemployment and slow wage growth, people are eating into their savings and this is dangerous. Slowdown in consumption has been sharper in the last nine months despite <a href="https://www.businessinsider.in/rbi-cut-interest-rates-by-35-basis-points-as-growth-sputters-and-inflation-cools/articleshow/70565859.cms">four interest rate cuts by the RBI</a>, though much of it has not been passed on by the banks. If monetary stimulus was enough, there would be signs of improvement in the economy or the sentiment but there aren’t any. 
	
	
	
	
	
	
	
	
	
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 On the contrary, lending rates are coming down and so are deposit rates-- and that hurts households directly. Therefore, another interest rate cut may not be the answer to rev up the sluggish economy and household consumption. The calls for further interest rate cuts are based on certain myths. Myth 1: India’s household savings are strong enough It has been true for decades that Indian households have saved for a rainy day and it is often these savings have been a shield during dire economic crises in the past. However, that is changing for many reasons. “As investment depends crucially on a low cost of capital, reducing real interest rates need not necessarily lower savings when the demographics are favourable,” the 2019 annual economic survey argued. However, India’s household deposits in banks have declined to their lowest level in over a decade as the interest rate offered by banks declined in recent years. Household savings as a percentage of GDP has <a href="https://economictimes.indiatimes.com/markets/stocks/news/fall-in-household-savings-leads-decline-in-net-financial-savings/articleshow/71058730.cms">fallen to 17.2% at the end of March 2019</a>. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 Meanwhile, in the two years ending June 2019, personal loans and credit card debts <a href="http://www.forbesindia.com/article/leaderboard/profitability-improves-for-banks-but-deeper-concerns-remain/54783/1">have increased by over 58%</a>, according to RBI data analysed by Forbes. People are either borrowing money or dipping into their savings for sustenance. 
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
	
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 So, as savings depleted and loans piled on, investments have gone down. Unsold homes have increased 7% to 1.3 million units at the end of June 2019, according to an independent real estate research firm Liases Foras. However, gold prices hit <a href="https://www.businessinsider.in/10-grams-of-gold-now-costs-40000/articleshow/70838768.cms">a whopping ₹40,000 an ounce</a> last month. And that brings us to the second myth. Myth 2: Indians factor in inflation while choosing investments. In theory, demand for gold should go down when inflation is low. And price rise in India has been low for over three years. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 But gold is an essential part of Indian culture and tradition and even when there is a fall in demand for gold, it is relatively low. The Narendra Modi government has tried to push people away from gold and to invest in more risky financial instruments like the share market and real estate. But as of March 2018, only 8% of household savings are in equity-- though a significant jump from 3% in FY16-- according to RBI data. While the diversification can be celebrated, the market carnage in the last one year has not only dented the confidence of the small investors, it has also made them poorer. Nearly a quarter of all households in India prefer bank deposits, according to an RBI report in July 2017. The pecking order of preference is children, own business, and bank deposits. Only a small fraction of all Indian families save in pension funds, or mutual funds. 
	
	
	
	
	
	
	
	
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 Very few Indians calculate adjust for inflation before investing or even while evaluating salary hikes. For example, the sentiment triggered by a 10% rise in salary is more or less the same irrespective of whether the inflation rate is 4% or 10%, even though prices have a direct impact on the savings. 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 A recent research by Motilal Oswal has showed that people invested less in bank deposits because the headline interest rate fell even though they may have yielded more when adjusted for inflation. "Pushing up household savings would require more efforts towards financial inclusion and possibly, incentives,” ratings agency Crisil said in a July 2019 report. As established earlier, that monetary stimulus like interest rate cuts have limited impact as an incentive. Myth 3: Interest rate cuts will spur consumption and savings Real investments, measured by gross fixed capital formation (GFCF), in the economy grew at an average of 9.2% in the last three years, at twice the rate compared to the preceding five, which included two of the infamous ‘policy paralysis’ period under the Congress-led United Progressive Alliance (UPA) regime when inflation was at scorchingly high level. However, digging deeper into the data, Motilal Oswal found that in the last three years, corporate investments grew over 7% every year compared to 12% in government investment and a measly 2% growth in household investments. This, at a time when inflation was low and interest rates were falling. The mood is sombre in most Indian homes The reality right now in India is that people are earning less and therefore the benefits of low inflation have not reached them. Small investors have lost money in the stock market. They are either borrowing more or eating into their savings for sustenance. Any further cut in deposit rates will make consumer more cautious because for most Indian families, it’s cash--whether it is at home or in the bank-- that counts. Investments, including buying a home or a car, depends on the near-term cash savings and near-term outlook on earnings. As most families are still reliant on bank deposits either for income or for a rainy day or retirement, any further cut in deposit rates will further affect savings and sentiment, and therefore consumption. The onus should now be on the government to revive investor sentiment via policy stimulus adding to <a href="https://www.businessinsider.in/nirmala-sitharam-address-on-india-economic-stimulus-live-updates-and-highlights/articleshow/70804926.cms" data-type="tilCustomLink" target="_blank">the ones Finance Minister Nirmala Sitharaman announced in late August</a>. As the renowned economist and former RBI governor Raghuram Rajan wrote in his book ‘Fault Lines: How Hidden Fractures Still Threaten The World Economy’, “the more a country finances its investment through its own domestic savings, the faster it grows. Conversely, the more foreign financing it uses, the more slowly it grows.” SEE ALSO: <a href="https://www.businessinsider.in/narendra-modi-pmeac-comments-on-indias-economic-slowdown/articleshow/70954078.cms" data-type="tilCustomLink" target="_blank">Here’s what Narendra Modi’s closest advisors have been saying about economic slowdown</a> <a href="https://www.businessinsider.in/recession-in-india-searches-spike-as-gdp-growth-hits-a-six-year-low/articleshow/70922461.cms" data-type="tilCustomLink" target="_blank">Indians were fearing recession even before data showed that GDP growth hit a six-year low</a>

Family savings in India face the threat of more interest rate cuts

India's central bank governor Raghuram Rajan may have reshaped monetary policy and brought down consumer inflation to the lowest in years, but convincing people like housewife Shaila Pai that prices are under control is proving a tough challenge. 
	 
	
		​Entrenched expectations of high inflation in India are feeding into higher wages and other prices, which could tie Rajan's hands even as he faces growing pressure to cut interest rates for a fourth time this year to help a patchy economy.
	 
	
		Pai, a mother of two in Mumbai, says she has yet to feel any benefit from official data showing inflation is easing. Her living costs are as high as they have ever been and the family is cutting down on travel, eating out and personal spending.
	 
	
		"The biggest part of our household expenses goes towards education, food and medicines, and all of them are very expensive. We can't cut corners much there," she said.
	 
	
		"I expect hospital, food, education costs will continue to rise in the double digits."
	 
	
		She is not alone. A survey by the Reserve Bank of India (RBI) this week showed households expect consumer inflation to hit 10.1% within three months, almost double the current 5.4% and a level not seen since late 2013.
	 
	
		At its latest policy review on Tuesday, the central bank kept rates steady but held out the prospect of another easing after cutting the policy rate by three-quarters of a percentage point so far this year.
	 
	
		"Price pressures are building up and these are sticky," said a senior policymaker familiar with the RBI's thinking. "We are cautious. We have to see whether core inflation will feed into headline numbers or not."
	 
	
		Cost of living rising
	 
	
		Since becoming governor in September 2013, Rajan has refocused policy on consumer inflation instead of wholesale prices. Earlier this year, the government and RBI agreed on adopting a target to keep inflation between 2% to 6%. 
	 
	
		While that looks on track for now, core inflation, which excludes volatile fuel and food prices, has risen for the past six months, and reached around 5% in June.
	 
	
		A 16.2% surge in urban wages in the January-March quarter, the biggest increase in 11 quarters, is a key driver of core inflation.
	 
	
		"In everybody's mind, inflation is hovering at 8%," said Anandorup Ghose, a partner and head of rewards at Aon Hewitt, a global human resource solutions company.
	 
	
		"For companies to give salary increases less than 10-10.5%, it almost seems like you are not giving a real pay increase compared to inflation."
	 
	
		Other costs are also starting to rise, according to the RBI.
	 
	
		Among the biggest increases have been in education, an expense few middle-class households in India are willing to cut.
	 
	
		Education costs rose 7.23% in June, the biggest jump among the sub-sectors in the core CPI data, followed by clothing and then household goods and services.
	 
	
		Rajan on Tuesday indicated the central bank would closely study the pace of inflation expectations and the way it impacts consumer behaviour.
	 
	
		"If we really want to manage inflation, we have to look at the sum total of inflation, especially the inflation that confronts consumers because that is what determines things like household savings behaviour. It also determines the wage pressures that will come," he told reporters.

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RBI sounds note of caution on OPS, says it may add to liabilities in future

IANS

A quarter of Indian gig workers’ salaries grew by 50% in the last one year

Vaamanaa Sethi

This is how much Raghuram Rajan earns as the RBI Governor

Poulomi Das

Here’s the monthly salary of RBI governor Urjit Patel

BI India Bureau

Here’s how much RBI governor Urjit Patel will earn now after salary hike

BI India Bureau

RBI’s Rajan is sounding off alarm bells for the economy asking the govt to announce a path-changing Budget 2016

BI India Bureau

Five things to know about payment banks

Poulomi Das

Banks are finally hearing Raghuram Rajan’s plea! Cheap homes finally a reality

BI India Bureau

Rajan urges govt to invite experts to deal with economic impact of COVID-19

PTI

Tamil magazine editor S. Gurumurthy 'pressurised' to take up RBI Board position

IANS

This IIM alumni wants to coach students of war-hit Kargil crack CAT exam

Prerna Sindwani

India announces a $22 billion package including cash transfers to feed and serve the poor during the coronavirus lockdown

BI India Bureau

Family savings in India face the threat of more interest rate cuts

Sriram Iyer

Inflation numbers may be down but are Indian housewives happy? We don’t think so!

BI India Bureau

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