Accommodative No More?
The minutes of MPC's latest meeting reveals that a few members of RBI's monetary policy committee are getting restless about its accommodative stance.
MPC member Jayanth Varma doesn't see the accommodative policy as being helpful anymore. The effect of accommodative stance has, in fact, been exactly opposite to what was originally intended. He argued that the 'accommodative' stance was supposed to improve credit intake to revive the businesses. However, that has not been the case. Instead, it has only ended up fueling inflation.
RBI's policy to flood the market with liquidity has not created the desired impact. And, this is the first sign of dissent among members since the outbreak of the pandemic. It also means that the members are now thinking on lines of squeezing the liquidity and containing the inflation.
Gold Hallmarking Faces a Teething Problem
According to the Bureau of Indian Standards, its gold hallmarking scheme is turning out to be a grand success. Over 90,000 jewellers have registered under the scheme as of August 20, 2021. It has received 1.17 crore jewellery pieces for hallmarking and hallmarked 1.02 crore pieces so far.
The scheme is also facing its fair share of resistance from jewellers. They are turned off by the rule of attaching unique code to every piece of jewellery. However, they were previously assured that the process will be restricted only to Assaying and Hallmarking Centres (AHCs).
Tagging every piece of jewellery is surely a tedious and time-consuming process. But, at the same time, it will help the government to track the gold inventory and help in determining accountability. It would be crucial to curb smuggling and black money that finds its way into the bullion market.
Fresh COVID-19 Curbs in China
China is imposing fresh COVID-19 curbs at airports and ports after detecting fresh COVID-19 infections among workers. As a result, the level of activities has reduced while freights have gone up. It could not have come at the worst time for India as the crucial festival season is approaching.
Right from smartphones to washing machines, China is the key raw material supplier of electronic goods and consumer durable items. And, fresh restrictions could directly impact the manufacturers during the peak season.
(To receive our E-paper on whatsapp daily, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)