RBI's bi-monthly MPC meet is upon us again. RBI is not expected to do any tinkering with benchmark rates. The central bank also has very limited room to go easy on its asset purchasing program to keep the flow of liquidity intact. In absence of major action on the policy front, it is the governor's commentary that hogs the limelight.
It would be interesting to see how RBI is tackling growing inflation. Currently, RBI has limited options in this regard as it needs to hold up liquidity and support growth. The ongoing recovery process and estimate of the third COVID-19 wave are the other trigger points that investors will have their eye on.
Moving towards digital currency
Prime Minister Narendra Modi is set to launch the digital payment system ‘e-RUPI’. The government intends to ensure a leak-proof delivery of welfare services with the help of this system.
The beneficiaries will receive payment links on their mobile phones in the form of an SMS string or a QR code. It will work like a prepaid gift voucher which will be redeemable at specific accepting centres. Read more about digital currency in our article: Is Digital Currency Really the Future?
‘e-RUPI’ is backed by the Indian rupee as the underlying asset. Hence, it is different from virtual cryptocurrencies. Currently, it is closer to a voucher-based payment system. India is mulling to launch its own digital currency, and the launch of e-RUPI could help in identifying the gaps in digital payment infrastructure before that.
Dip in sales
The two-wheeler industry continues to remain under pressure. Hero MotoCorp has reported a 13% YoY dip in total sales for July. It sold 4,54,398 units against 5,20,104 units in July 2020.
HeroMotors is the largest domestic two-wheeler manufacturer, regularly achieving monthly sales of over 7 lakh vehicles. But, current sales numbers are below par from that benchmark. As per the company's statement, its retail touch-points are operational across the country, but localised lockdowns are persisting in certain states. It continues to restrict customer movement.
Weak sales figures are directly reflecting the weak consumer sentiments. It could also be attributed to the shortage of semiconductors, which has restricted the production capacity of automakers.
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