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With just 2 days to go before finance minister Nirmala Sitharaman presents the union budget 2024, various sectors are abuzz with their expectations from the first full fledged budget to be presented under PM Modi's third consecutive term. Most experts anticipate the budget to focus heavily on boosting consumer demand and accelerating infrastructure development. In fact, president Murmu has already hinted that the budget will be historic, both in its scope and announcements. As such, what is it that the Indian insurance industry, driven by IRDA's vision of "Insurance for all by 2047" want from this budget? Lets find out <h2>Capture the <keyword id="21409017" type="General" weightage="20" keywordseo="annuity-market" source="keywords">annuity market</keyword> </h2>Subhrajit Mukhopadhyay, Executive Director, Edelweiss <keyword id="19936531" type="General" weightage="20" keywordseo="life-insurance" source="keywords">Life Insurance</keyword> anticipates that the upcoming budget should tackle the issue of how annuities are taxed. Currently, they are completely taxable in the hands of customers, which reduce its attractiveness, vis a vis other retirement planning options like NPS (National Pension System). According to a recent report by UNFPA, the population of number of individuals in the country who are aged 60 or more is set to double to around 346 million in the next 30 years. As such, it becomes all the more important to create awareness regarding retirement planning, and ensuring the aged have a secure, stable source of income in their twilight years, which is where annuities come in. "India’s vast ageing population underlines its burgeoning pension and annuity market. Annuity caters to the key dilemma of a pensioner, for a life-long pension at a steady, guaranteed rate and exposes the investors to a reinvestment rate risk especially in a volatile interest rate scenario. Annuities are the only solution, which provide complete protection from the perspective of living longer (i.e. outliving one’s corpus), by providing a regular flow of income throughout one’s lifetime, purchased in lieu of a single lump-sum amount. Currently, tax incentive is offered for people to accumulate corpus in NPS under Section 80CCD (1b ). A similar incentive may also be extended to annuities", noted Mukhopadhyay <h2>Separate sops for <keyword id="19894985" type="General" weightage="20" keywordseo="health-insurance" source="keywords">health insurance</keyword> premiums </h2>One of the most vocal demands of the insurance industry at the moment is to increase the tax deduction limit for premiums paid towards life and health insurance. At present, individuals aged below 60 can claim an annual deduction of up to Rs 25,000 towards health insurance premiums paid for self, spouse or children. The limit goes up to Rs 50,000 in case of senior citizens. Mr. Rakesh Goyal, Managing Director, Probusinsurance.com hopes that the budget will raise this limit to Rs 50,000 for self, spouse, and children, and Rs 1 lakh for senior citizens. Anup Rau Managing Director &amp; Chief Executive Officer of Future Generali India Insurance Company Limited, agrees to this. “Making insurance products affordable and accessible to masses will be crucial to ensure India achieves “Insurance for All by 2047” – a goal set by IRDAI - and this calls for certain <keyword id="20071222" type="General" weightage="20" keywordseo="tax-incentives" source="keywords">tax incentives</keyword>. The deduction limit on health insurance premium under Section 80D has remained unchanged for the past nine years despite the fact that there has been a significant rise in healthcare costs across the country. Interestingly, India, which surpasses South Asian peers with a medical inflation rate of 14%, last witnessed an enhancement in the deduction limit in 2015-16. Also, these benefits need to be extended to the new tax regime as well since increasing health <keyword id="20998941" type="General" weightage="100" keywordseo="insurance-penetration" source="keywords">insurance penetration</keyword> is critical", he adds. Goyal goes a step ahead, and advocates for creating a separate exemption limit for insurance premiums, in addition to the existing threshold of Rs 1,50,000. "Right now, Indians get a tax exemption of Rs 1.5 lakh every year, but it's crowded with various financial products. We would expect the limit to increase or to establish a separate exemption limit specifically for life insurance premiums. This move would help increase countrywide insurance penetration", says Goyal. Krishnan Ramachandran, Managing Director and Chief Executive Officer (MD&amp;CEO) of Niva Bupa Health Insurance also advocates for the 80D tax exemption to be linked to inflation and revised periodically. Also, per him, tax exemptions should also extend to dependent family members like siblings. Syed Meraj Naqvi,CEO &amp; Principal Officer, Riskbirbal Insurance Brokers also thinks on similar lines. "Adding a portion of medical insurance premiums for tax relief alongside the current 1,50,000 deduction limit would not only ease financial burdens but also encourage the younger generation to embrace saving habits. It’s about nurturing a mindset of financial responsibility while ensuring adequate healthcare coverage for all", he notes. Parimal Heda, Chief Investment Officer, Go Digit General Insurance believes that a good way to increase insurance coverage amongst young individuals is by offering a significant tax discount. "This could also be considered particularly for first-time health insurance buyers, especially youngsters. A tax exemption of 200% of the premium amount can be considered under chapter VIA. This can later be reduced in a phased manner of four years to make the same at par with the existing tax benefit provided under Section 80D", Heda observes. <h2>Don't overlook home, vehicle insurance </h2>Even though motor insurance, which makes up for around 50% of the non-life insurance industry (sans health) grew at around 12.9% in FY24, touching Rs 91,781.3 crore, over 50% of vehicles don’t even have a third-party (TP) motor insurance. To counter this, Heda suggests a one-time tax exemption can be offered to people to renew their lapsed TP policy. Additionally, given the increasing frequency of natural calamities adversely impacting human property, it is necessary to increase home insurance penetration to protect homeowners. Per Heda, the government, with the help of RERA can make home insurance mandatory for new homeowners, for which a tax deduction of up to Rs 25,000 can also be considered on home insurance premiums. However, a word of advice. Do not wait for tax breaks, or budget announcements to buy a life, or health insurance in case you already don't have one. Get one right away!

Budget 2024: Three things the insurance sector want from FM Sitharaman this budget.

The Federation of Automobile Dealers Associations (<keyword id="354719" type="General" weightage="80" keywordseo="fada" source="Orion">FADA</keyword>), the leading body of automobile retail in India, on Thursday submitted a critical representation to the Goods and Services Tax (<keyword id="6354679" type="General" weightage="100" keywordseo="gst" source="Orion">GST</keyword>) Council, urging an immediate reduction in the GST rate on two-wheelers from the current 28 per cent to 18 per cent. This timely and decisive intervention is aimed at making two-wheelers more affordable, reviving demand and reinvigorating an industry that has seen a significant slump in sales over the past few years, according to a statement from FADA. FADA President Manish Raj Singhania affirmed, "The two-wheeler industry is at a critical juncture, grappling with unprecedented challenges such as rising inflation, stringent emission norms, and the post-COVID-19 effects in Bharat of India." He said this is the opportune moment for the GST Council to reduce the GST rate on two-wheelers, making them more accessible for the common man, thereby providing the much-needed boost to the industry, generating employment opportunities and fostering India's overall economic growth. FADA's compelling appeal has been forwarded to Finance Minister Nirmala Sitharaman, chair of the GST Council, all GST Council members; the Ministry of Heavy Industries, which supervises the automobile sector and the Ministry of Road Transport and Highways. This action underscores the urgency and significance of the issue, it added. FADA said over the past few years, the prices of various two-wheelers have risen significantly, impacting their affordability for consumers across India. This surge in prices can be attributed to multiple factors, including the rising cost of raw materials, stricter emission norms and higher taxes and levies, FADA said, adding that for instance, the price of the popular -- Honda Activa -- has escalated from Rs 52,000 in 2016 to Rs 88,000 in 2023. Similarly, the Bajaj Pulsar has witnessed a substantial increase from Rs 72,000 in 2016 to Rs 1,50,000 in 2023. The Hero Splendor and <keyword id="1871753" type="General" weightage="50" keywordseo="tvs-jupiter" source="Orion">TVS Jupiter</keyword> have also experienced considerable price hikes over the same period, with their prices soaring from Rs 46,000 to Rs 74,801 and Rs 49,000 to Rs 88,498, respectively. The continuous rise in two-wheeler prices has consequently led to a decline in sales, emphasising the pressing need for intervention and GST rate reduction to restore the industry's growth trajectory, according to the statement. In 2016, two-wheelers accounted for 78 per cent of the total automobile sales in India. However, due to continuous price increases since 2020, this contribution has fallen to 72 per cent in FY23, underlining the impact of the steep price hike. FADA believes that a reduction in the GST rate will address several critical issues facing the industry, including rural distress, the transition from BS-4 to BS-6 emission norms and the sharp increase in two-wheeler prices. Lowering the GST rate will enhance the competitiveness of two-wheelers compared to other transportation modes, thereby increasing sales and revenue for the industry. The association also said two-wheelers play a pivotal role in providing affordable mobility to a large segment of India's population, especially in rural areas where public transportation is sparse. FADA also asserted that two-wheelers, being essential for millions, should not be categorised as sin goods or luxury items for GST taxation purposes. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/apple-app-store-prevented-over-2-billion-in-fraudulent-transactions-last-year-banned-282-million-user-accounts/articleshow/100322718.cms">Apple App Store prevented over $2 billion in fraudulent transactions last year, banned 282 million user accounts</a> <a href="https://www.businessinsider.in/business/auto/news/electric-scooters-and-bikes-may-get-costlier-as-government-looks-to-revamp-the-fame-ii-scheme/articleshow/100321089.cms">Electric two wheelers may get costlier as government looks to revamp the FAME-II scheme</a> <a href="https://www.businessinsider.in/tech/news/how-to-find-phone-numbers-registered-in-your-name-and-block-those-that-arent-yours/articleshow/100297548.cms">How to find phone numbers registered in your name and block those that aren’t yours</a>

Automobile dealers' association seeks GST cut on 2-wheelers from 28% to 18%

<ul><li>The Reserve Bank of India on Thursday made a moderate revision in its growth and inflation outlook for FY24. </li><li>Citing robust urban demand and a healthy growth in rural demand during Q4, <keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword> increased the FY24 GDP growth outlook to 6.5% from 6.4% earlier. </li><li>RBI has projected FY24 inflation at 5.2% from 5.3% earlier, citing robust rabi harvest, easing commodity prices and expectations of a normal monsoon. </li></ul>The Reserve Bank of India on Thursday revised India’s economic growth outlook upwards, expecting a real gross domestic product (GDP) growth rate of 6.5% in FY24, crediting it to a resilient economy in Q4 FY23. This is a 10 basis point increase from the previous Monetary Policy Committee (<keyword id="6369693" type="General" weightage="80" keywordseo="mpc" source="Orion">MPC</keyword>) announcement in February, which pegged FY24 GDP growth at 6.4%. RBI governor Shaktikanta Das announced the upward revision in the GDP growth outlook during the<a href="https://www.businessinsider.in/finance/news/rbis-monetary-policy-committee-keeps-repo-rate-unchanged-at-6-5/articleshow/99284354.cms"> MPC announcement today</a> while keeping the repo rate unchanged at 6.5%. Das said that the Indian economy is projected to grow at 7.8% in Q1 FY24, and subsequently at 6.2%, 6.1% and 5.9% in the second, third and fourth quarters, respectively. <div type="image" title="India GDP FY24 RBI projection April 2023." msid="99289989" hostid="261" sizebytes="13812" caption="&amp;lt;p&amp;gt;RBI&amp;#39;s FY24 GDP growth projection&amp;lt;/p&amp;gt;"></div> “While the numbers may not really be significant, the messaging is subtle that the MPC expects the economy to fare well on both counts this year,” said Madan Sabnavis, chief economist, Bank of Baroda. <cmsannotation type="cmsannotation" annotationid="Resilient economy, healthy growth in rural demand" comment="subhead" text="Resilient economy, healthy growth in rural demand">Resilient economy, healthy growth in rural demand</cmsannotation> Crediting the upward revision to a resilient economic performance in Q4, Das said that the overall demand scenario was robust in Q4 – while urban demand remained robust, rural demand had also seen a healthy growth in consumer non-durables, tractors and two-wheeler sales. “Looking ahead, the higher rabi production has brightened the prospects for the agriculture sector and rural demand. The steady growth in contact-intensive services should be positive for urban demand,” Das said. According to the analysts at ICICI Securities, too, high frequency indicators like GST collections, auto sales, air traffic, power demand, among other factors suggest that data does not corroborate the thesis of a slowdown in India. In contrast, data does suggest a slowdown in developed markets, the brokerage said. Echoing similar sentiments, Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities, said, “The RBI remains comfortably on the growth front, for now. We believe the risks to this outlook are skewed towards the downside.” With that being said, some analysts say RBI’s 6.5% growth projections could be slightly on the optimistic side. It is worth noting that the World Bank revised India’s FY24 growth projections slightly downwards to 6.3% from 6.6% earlier. “The 6.5% GDP growth rate appears to be on the optimistic side when seen in the context of a slowing global economy,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services. The Asian Development Bank too expects India’s growth to moderate to 6.4% in FY24 from 6.8% in FY23. Das, too, hedged growth expectations by stating that there are additional downside risks from financial stability concerns, alluding to the banking sector crisis in the US and Europe. For context, the International Monetary Fund, too, has trimmed the 2023 growth outlook for the global economy to 2.9% from 3.4% in 2022. <cmsannotation type="cmsannotation" annotationid="Inflation expected to soften, but battle not over yet" comment="subhead" text="Inflation expected to soften, but battle not over yet">Inflation expected to soften, but battle not over yet</cmsannotation> In a similar vein, RBI has trimmed its consumer price index (CPI) inflation expectations for FY24 marginally from 5.3% earlier to 5.2% now. <div type="image" title="CPI inflation FY24 RBI projection April 2023." msid="99290019" hostid="261" sizebytes="13944" caption="&amp;lt;p&amp;gt;RBI&amp;#39;s FY24 CPI inflation projection&amp;lt;/p&amp;gt;"></div> However, RBI’s battle against inflation is not over yet – in fact, Das said that the MPC will step in if the need arises. “The war against inflation will continue until we see a durable decline in inflation, closer to the target. The MPC will not hesitate to take further action as may be required in its future meetings,” Das said. He also noted that the core inflation is still ‘rigid’, further reinforcing the fact that the inflation battle will be “gradual and protracted”. One of the factors which could spoil RBI’s inflation projections is the threat of El Niño, which could adversely impact farm output. Earlier, the Finance Ministry had also flagged its concerns amidst an IMD prediction of above-normal temperatures in India this year. “An El Nino this year will negatively impact kharif sowing and next year’s rabi sowing due to lower availability of water,” said JM Financial. On the whole, while making marginal revisions in its GDP and inflation outlook, Das said he is confident that the MPC is on the right track and is maintaining an agile stance to ensure the financial system’s stability, recalling Kautilya’s (also known as Chanakya) advice: “Be not slack before the whole job is finished”. The first MPC meet of FY24 has set a positive tone on both the critical fronts of growth and inflation. It remains to be seen if it is on the right track or if a course correction is required down the path. SEE ALSO: <a href="https://www.businessinsider.in/finance/news/rbis-monetary-policy-committee-keeps-repo-rate-unchanged-at-6-5/articleshow/99284354.cms">RBI’s Monetary Policy Committee keeps repo rate unchanged at 6.5%, for now</a> <a href="https://www.businessinsider.in/stock-market/news/after-the-ides-of-march-analysts-pick-best-stocks-that-can-be-bought-on-dips/articleshow/99272438.cms">After the Ides of March, analysts pick best stocks that can be bought on dips</a> <a href="https://www.businessinsider.in/finance/news/-jio-financial-services-demerger-and-listing-a-key-moment-for-reliance-stock/articleshow/99264110.cms">Jio Financial Services demerger and listing a ‘key moment’ for Reliance stock</a>

RBI revises India’s FY24 growth outlook, expects softer inflation on the back of lower commodity prices

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>) can argue its case strongly with the Central government as to why the <keyword id="22195" type="General" weightage="20" keywordseo="inflation" source="Orion">inflation</keyword> was not controlled at 4 per cent, said experts. The RBI's Monetary Policy Committee (MPC) will meet on November 3 to discuss what it would tell the Centre as to why it was not able to restrain the inflation. The RBI may also sound out the Central government as to the course of inflation as well as the reasons as to why it may be at the elevated levels. In <keyword id="3658" type="General" weightage="20" keywordseo="india" source="Orion">India</keyword>, the retail inflation rose to 7.41 per cent in September. Experts were of the view that a combination of global and local (glocal) factors -- geopolitical developments, crop production, reduction in crude oil production and the resulting price increase and depreciating rupee -- are expected to heat up the prices. The RBI on its part is trying to contain the inflation by increasing the repo rate -- the rate at which it lends to the banks. The central bank has increased the repo rate by 190 basis points in recent times and the last one was by 50 basis points last month. "There is a strong case for the RBI arguing that (a) inflation has primarily been caused by supply side shocks with global commodity prices having an impact (b) rupee depreciation has added to imported inflation (c) the RBI on its part was proactive in raising rates even between two policies as it did in May when it saw things were going out of hand post Ukraine war and (d) there have been some measures like increase in goods and services tax (GST) which has added to inflation that was happening in parallel," Madan Sabnavis, Chief Economist, Bank of Baroda, told IANS. "Therefore, there is an explanation as to why inflation was high. But the central bank has been acting to bring it down through the instruments it has like repo and CRR (cash reserve ratio). It has succeeded in lowering surplus liquidity too which can be proved," Sabnavis added. "The RBI can say that inflation is due to supply side constraints a nd excess liquidity," says K. Ramasubramanian, retired General Manager, RBI, and a forex advisor. "In addition, there was a huge sale of forex almost Rs 3 lakh crore to maintain the exchange rate. Inflation which was more than the target continuously for three quarters is estimated to come around 6 per cent by three more quarters. Interest rates (repo rate) have been increased almost 1.9 per cent. As such the MPC may only be constrained to say that the present steps taken need some more time for having a positive impact to reduce inflation. This is subject to the time inconsistency impact," he added. The RBI has scheduled the November 3 meeting of MPC under Section 45ZN of the RBI Act. As per the said Section, when the RBI fails to meet the inflation target, it shall send a report to the central government listing: (a) the reasons for failure to achieve the inflation target; (b) remedial actions proposed to be taken by it; and (c) an estimate of the time-period within which the inflation target shall be achieved pursuant to timely implementation of proposed remedial actions. As per the RBI Act the MPC shall determine the Policy Rate required to achieve the inflation target. Further as per the RBI Act, the central bank shall organise at least four meetings of the MPC in a year. Announcing the credit policy RBI Governor Shaktikanta Das said: "There are also upside risks to food prices. Cereal price pressure is spreading from wheat to rice due to the likely lower kharif paddy production. "The lower sowing for kharif pulses could also cause some pressures. The delayed withdrawal of monsoon and intense rain spells in various regions have already started to impact vegetable prices, especially tomatoes. These risks to food inflation could have an adverse impact on inflation expectations." According to the RBI Governor, the Indian basket crude oil price was around $104 per barrel in H1:2022-23 and expected to be around $100 per barrel in H2: 2022-23. "Taking into account these factors, the inflation projection is retained at 6.7 per cent in 2022-23, with Q2 at 7.1 per cent; Q3 at 6.5 per cent; and Q4 at 5.8 per cent, with risks evenly balanced. CPI (consumer price index) inflation is projected to further reduce to 5.0 per cent in Q1:2023-24," Das said. However, one has to see the RBI's prediction as to crude oil prices ($100 per barrel) as the oil producing countries have announced a cut in their production and the international prices going up. Economists and common man have a different take on the RBI's expectations on inflation. "Presently inflation does appear unlikely that it will move downwards for two sets of factors. The increase in oil price and rupee depreciation has potential to increase imported inflation," Sabnavis had told IANS earlier. "Second, there have been some shortfalls in kharif production which will mean an increase in prices. Also the late withdrawal of rain has affected vegetable crops and also adversely affected the harvest of rice and oilseeds in some regions." The reduction in sown area for rice and pulses during Kharif season is expected to feed inflation in the coming months. The overall sown acreage for the Kharif season has declined by 0.8 per cent at the end of September 30, 2022 as compared to last year, the Bank of Baroda said in a recent report. "The inflation rate will be 6.5-7 per cent in FY23 and 5.5-6 per cent in FY24," Sabnavis had remarked. The RBI Governor had said the communication with the central government is a privileged one and it will not made public by the Bank. Das also said there no legal stipulation on the frequency of the communication between RBI and the government. He had earlier said the inflation rate is expected to come down to four per cent in two years time. There are many uncertainties. The RBI has pegged the inflation rate at 6.7 per cent for FY23. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/apple-surges-to-add-178-billion-in-market-value-as-4th-quarter-earnings-help-drive-a-turnaround-in-the-stock-market/articleshow/95153518.cms">Apple surges to add $178 billion in market value as 4th-quarter earnings help drive a turnaround in the stock market</a> <a href="https://www.businessinsider.in/stock-market/news/the-fed-will-hike-rates-too-far-and-tip-the-global-economy-into-a-recession-survey-of-economists-says/articleshow/95151308.cms">The Fed will hike rates too far and tip the global economy into a recession, survey of economists says</a> <a href="https://www.businessinsider.in/thelife/news/see-inside-an-almost-1-million-prefab-tiny-home-village-near-seattle-trying-to-solve-the-ongoing-homelessness-crisis/slidelist/95153993.cms">See inside an almost $1 million prefab tiny home village near Seattle trying to solve the ongoing homelessness crisis</a>

RBI can argue its case on inflation control say experts

Economists are of the view that the measures taken by 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>) have controlled inflation and add that inflation will come down. A senior economist also said the headline inflation could be 7.5 per cent in December putting a spanner in the inflation projections of the central bank. The RBI's Monetary Policy Committee (MPC) will meet on November 3 to discuss what it would tell the Centre as to why it was not able to restrain the inflation within four per cent + or - two per cent for three consecutive quarters. The RBI may also sound out to the Central government as to the course of inflation as well as the reasons why it may be at elevated levels. India's central bank has been trying to contain inflation by increasing the repo rate -- the rate at which it lends to the banks. The central bank has increased the repo rate by 190 basis points in recent times and the last one was by 50 basis points. In India, the retail inflation rose to 7.41 per cent in September. "The measures taken by the government and RBI have been able to control inflation from the high of 7.8 per cent we had seen in April. The fall in global commodity prices has also been supported in containing inflation. Inflationary expectations have also come down," Rajani Sinha, Chief Economist, CARE Ratings Ltd told IANS. "However, the concern is the stickiness of core inflation above six per cent and the renewed surge in domestic food inflation in the last few months. The measures taken by RBI to control inflation will show further impact with a lag of a few quarters," she added. "There is a strong case for the RBI arguing that (a) inflation has primarily been caused by supply-side shocks with global commodity prices having an impact (b) rupee depreciation has added to imported inflation (c) the RBI on its part was proactive in raising rates even between two policies as it did in May when it saw things were going out of hand post-Ukraine war and (d) there have been some measures like increase in goods and services tax (GST) which has added to inflation that was happening in parallel," Madan Sabnavis, Chief Economist, Bank of Baroda, told IANS. "Therefore, there is an explanation as to why inflation was high. But the central bank has been acting to bring it down through its instruments, like repo and CRR (cash reserve ratio). It has succeeded in lowering surplus liquidity too which can be proved," Sabnavis added. "There was a huge sale of forex almost Rs 3 lakh crore to maintain the exchange rate. Inflation which was more than the target continuously for three quarters is estimated to come to around 6 per cent by three more quarters. Interest rates (repo rate) have increased by almost 1.9 per cent. As such the MPC may only be constrained to say that the present steps taken need some more time for having a positive impact to reduce inflation. This is subject to the time inconsistency impact," K. Ramasubramanian, retired General Manager, RBI, and a forex advisor told IANS. According to Sinha, the CPI inflation is estimated to inch below seven per cent in the next few months due to the base effect and below six per cent by the end of the fiscal year. Looking ahead, Sinha said the RBI could hike the repo rate further by 25-50 bps in the current fiscal year. "As we approach closer to the neutral policy rate, RBI will get more cautious in its rate decision," she added. Citing the unseasonal rain affecting the Kharif crops and the September food inflation at 8.4 per cent Dr Soumya Kanti <keyword id="4757" type="General" weightage="50" keywordseo="ghosh" source="Orion">Ghosh</keyword>, Group Chief Economic Adviser, <keyword id="6354731" type="General" weightage="50" keywordseo="state-bank-of-india" source="Orion">State Bank of India</keyword> said in 2019 when such rains happened, the average food prices more than doubled from 4.9 per cent to 10.9 per cent. Similarly, the headline inflation in December could be 7.5 per cent and could put a spanner to the inflation projections of RBI and market consensus, Ghosh said in a research report. "This could also mean that the terminal repo rate could still be difficult to comprehend at this time, though consensus puts it at 6.5 per cent," Ghosh said. According to Sinha, the <keyword id="6356435" type="General" weightage="50" keywordseo="us-federal-reserve" source="Orion">US Federal Reserve</keyword>'s policy decisions and the consequences on the currency market will also have a bearing on RBI's future policy decisions. Economists said the MPC will not be deciding on the policy rate at their November 3 meeting. "With global commodity prices falling and the likely support of base effect in containing India's CPI inflation in the next few months, RBI is unlikely to be in a tearing hurry," Sinha added. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/no-scientific-basis-to-two-finger-test-on-rape-survivors-causes-trauma-sc/articleshow/95198492.cms">No scientific basis to two-finger test on rape survivors, causes trauma: SC</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/iit-madras-generates-rs-1081-cr-from-funding-and-revenue/articleshow/95200293.cms">IIT Madras generates Rs 1,081 cr from funding and revenue</a>

RBI measures controlled inflation, but challenges remain say economists

The <a href="http://www.businessinsider.in/searchresult.cms?query=GST&amp;sortorder=effectivedate">GST Bill</a> has been passed in the Rajya Sabha and now it will go to the <a href="http://www.businessinsider.in/searchresult.cms?query=gst+council&amp;sortorder=effectivedate">GST council</a> for setting down the <keyword id="6412918" type="UNKNOWN" weightage="20" keywordseo="GST-rate">GST rate</keyword> in consultations with the states. 
 
The Council will now have to tread carefully after <a href="http://www.businessinsider.in/searchresult.cms?query=arun+jaitley&amp;sortorder=effectivedate">Finance Minister Arun Jaitley,</a> while presenting the GST Bill in the Rajya Sabha, said the GST rate is likely to be between 18 and 20 per cent, as advised by the chief economic adviser. 
 
As per economists, the GST rate of 18-20 per cent will cause mild <a href="http://www.businessinsider.in/searchresult.cms?query=inflation&amp;sortorder=effectivedate">inflation</a> and if it is kept higher than 20 per cent, it will lead to high inflation. 
"The more you move away from the standard rate of 20%, the inflationary pressures will rise. Inflationary pressures will depend on how the RNR (revenue-neutral rate, or the rate at which tax revenues will remain the same for Centre and states) is split between standard and low rate," Abheek Barua, chief economist at HDFC Bank, told ET. 
 
"There will be mild inflation...services would become expensive," DK Joshi, chief economist at ratings agency Crisil, told ET, adding “the inflationary pressures will reduce in the medium term because of efficiency gains. 
 
During the GST debate in the Rajya Sabha, former Finance Minister P Chidambaram said if the service tax rate is increased to 23-24%, it will lead to huge inflation and will lead to a backlash. 
 
(Image: Reuters)

GST Council to walk a tightrope while deciding GST rate between 18-20%

<a href="http://info.shine.com/">http://info.shine.com/</a> 
 Consumer <keyword id="22195" type="COMPANY" weightage="20" keywordseo="Inflation">inflation</keyword> fell to a record low of 1.54 per cent in June, easing further from May's 2.18 per cent, after a drop in food prices. This is the lowest level of inflation since the series began in 2012 raising hopes the <keyword id="6354335" type="CITY" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (RBI) may cut rates to boost the stressed industrial sector. The RBI is expected to cut its key policy rate by 25 basis points in its review meet on August 2, Bank of America Merrill Lynch had said earlier in a report. However, some economists say that the RBI could still remain cautious, watching out for the impact of the goods and services tax (<keyword id="6354679" type="ORGANIZATION" weightage="20" keywordseo="GST">GST</keyword>), which came into force on July 1, though food products were exempt from taxes under the new system. A separate set of data showed industrial growth at 1.7% in May below the downwardly revised 2.7% figure for April. June’s <keyword id="6354851" type="ORGANIZATION" weightage="20" keywordseo="Retail">retail</keyword> inflation is the lowest since the government began issuing data based on the consumer price index (CPI) in 2012. The decline in food inflation at 2.12% was steeper than the 1.85% fall registered in May. Vegetable inflation cooled 16.5% while pulses and products inflation was 21% lower in June. 
 
On industrial production front, mining output fell 0.9% in May from a 5.7% rise in the year ago period. Manufacturing output grew a meagre 1.2%. Electricity production, however, was a bright spot with an 8.7% rise compared with a 6.1% rise in April. 
 
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