Editorial 1 : Staying put
Introduction: The monetary policy committee of the Reserve Bank of India voted unanimously to keep interest rates unchanged in its December meeting. The repo rate currently stands at 6.5 percent.
What is the Monetary Policy Committee (MPC) of RBI?
- The Monetary Policy Committee (MPC) is a crucial body within the Reserve Bank of India (RBI) responsible for formulating and implementing India's monetary policy. It is tasked with maintaining price stability while ensuring balanced economic growth.
Composition and Mandate:
- Chairperson: Governor of RBI (currently, Shaktikanta Das)
- Six Members: Three nominated by the Central Government and three by RBI
- Mandate: Maintain inflation at 4% annually with an upper tolerance of 6% and a lower tolerance of 2% (until March 31, 2026)
Key Functions:
- Determine the repo rate, the rate at which RBI lends to commercial banks
- Decide on the cash reserve ratio (CRR), the minimum percentage of deposits banks must keep with RBI
- Formulate and implement open market operations to manage liquidity in the financial system
- Conduct research and analysis on the Indian economy and global economic trends
- Issue monetary policy statements explaining the rationale behind policy decisions
The decision of a recent meeting of the RBI
- The MPC voted 5-1 to remain focused on the withdrawal of accommodation.
- In his statement, RBI Governor Shaktikanta Das stated that policy has to be “actively disinflationary” to ensure that inflation aligns with the central bank target of 4 per cent, and reiterated the committee’s readiness to take appropriate policy actions if warranted.
Recent trends in inflation
- In recent months, there has been a steady decline in inflation.
- Retail inflation, as measured by the consumer price index, fell to 4.87 per cent in October, after touching 7.44 per cent in July.
- The decline has been largely driven by food inflation which fell from 11.51 per cent in July to 6.61 per cent in October, as food prices, especially of vegetables, moderated.
- Alongside, there has also been a steady decline in core inflation, which excludes the more volatile food and fuel components.
- However, the near-term inflation outlook is uncertain. There is the possibility of an uptick in food prices in the months of November and December — as supply and demand in major commodities like cereals, pulses and sugar are in fine balance, climate related uncertainties over the rabi crop raise questions over the trajectory of food prices.
What made RBI keep the policy rate unchanged?
- RBI Governor Shaktikanta Das also acknowledged this, noting that high frequency indicators do point towards an increase in prices of vegetables which may push up inflation.
- The central bank has thus projected inflation to ease slowly from 5.6 per cent in the third quarter (October-December) to 5.2 per cent in the fourth quarter (January-March).
- Inflation is expected to trend towards the central bank’s target next year, averaging around 4.3 per cent in the second and third quarters.
RBI optimism on GDP growth rate
- On growth, the central bank remains optimistic, saying that the economy shows remarkable resilience.
- While concerns over private consumption persist, the RBI sees urban demand as durable, and projects a gradual turnaround in rural demand.
- It notes that investment activity continues to be aided by government spending and expects the drag from external demand to moderate as exports turn around.
- After the second quarter GDP estimates surpassed expectations, the RBI has raised its forecast for the full year to 7 per cent, up from 6.5 per cent earlier.
- But this forecast implies that growth will slow down from 7.7 per cent in the first half to 6.25 per cent in the second half.
- For next year, too, the central bank’s projections are optimistic, pegging growth at 6.7 per cent in the first quarter, falling only marginally to 6.4 per cent in the third quarter.
Conclusion: How this growth-inflation trajectory evolves, and whether it moves in line with the central bank’s expectations, will determine when the committee begins to ease policy rates.
Editorial 2 : Garba for all
Introduction: This week, Garba joined other Indian dances, such as the Kalbelia folk dance of Rajasthan, Chhau from eastern India, Sankirtana from Manipur and Mudiyettu from Kerala, on the UNESCO’s list of Intangible Cultural Heritage of Humanity, becoming another representative of the richness of India’s performing art traditions.
UNESCO's Intangible Cultural Heritage of Humanity
- The UNESCO List of Intangible Cultural Heritage of Humanity is a collection of cultural practices and expressions considered to be of outstanding universal value by the United Nations Educational, Scientific and Cultural Organization (UNESCO). The list aims to safeguard and promote these intangible cultural heritages for future generations.
Types of Intangible Cultural Heritage:
UNESCO's list includes various types of intangible cultural heritage, such as:
- Oral traditions and expressions, including languages, proverbs, and storytelling
- Performing arts, including music, dance, and theater
- Social practices, rituals, and festive events
- Traditional knowledge and practices concerning nature and the universe
- Craftsmanship and traditional skills
How a Cultural Practice Enters the List?
There are two main ways a cultural practice can be inscribed on the list:
- Representative List: This list recognizes cultural practices that demonstrate the diversity of intangible cultural heritage and raise awareness about its importance.
- List of Intangible Cultural Heritage in Need of Urgent Safeguarding: This list includes cultural elements facing serious threats of disappearing.
Significance of the List:
The UNESCO list plays a crucial role in:
- Raising awareness: The list helps to promote understanding and appreciation for diverse cultural traditions around the world.
- Encouraging safeguarding: The list encourages governments and communities to take steps to protect and preserve their intangible cultural heritage.
- Promoting international cooperation: The list fosters collaboration between countries and communities in safeguarding intangible cultural heritage.
Garba is a modicum of Indian diversity
- In one important way, Garba is distinct from many of the Indian, and non-Indian traditions, on the list.
- An indelible part of every Gujarati celebration, from wedding to birth, and, most notably, the annual nine-day festival of Navratri, it remains a thriving tradition.
- One feature that keeps it alive is its strong roots in community, with everyone, young and old, male and female, expert and amateur, dancing around a perforated earthen pot — the metaphorical universal womb from which all of humanity emerged and a symbol of the earth’s fertility.
- The other is its adaptability — every new generation refashions the dance to its tastes, with songs and techniques from over a hundred years ago being as popular as the more contemporary ones.
- There is no existential threat to Garba, but its inclusive character has, of late, become imperilled.
- While the worship of goddess Amba (a form of Durga) is a key part of this tradition, as the film submitted to UNESCO by the Government of India states, people of other faiths were for long enthusiastic participants.
Conclusion: Reports, in recent years, of performances being open to only Hindus, and Dalits being assaulted for attending events for upper-caste communities, must be taken seriously if this beloved intangible heritage is to continue to thrive.