Economists, traders, and financial experts will turn their attention to the Reserve Bank of India (RBI) this week, as it convenes the Monetary Policy Committee (MPC) meeting this week.
The three-day MPC meeting is scheduled just days after what has been lauded as a "non-inflationary" Union Budget tabled by Finance Minister Nirmala Sitharaman in the Parliament. It will also be the first one chaired by the new RBI governor Sanjay Malhotra.
On Tuesday, Tuhin Kanta Pandey, the finance secretary, said he hoped that the RBI's monetary policy would be in tandem with the fiscal policy outlined in the latest Budget. This meant that the RBI would have to lower the fiscal deficit in line with the government projections.
The Union Budget estimated the fiscal deficit for FY2025 to be 4.8 per cent of GDP, lower than the previous projections of 4.9 per cent. The FY2026 deficit is estimated at 4.4 per cent of GDP.
The MPC begins its three-day meeting on February 5 and looks to announce the committee's policy decisions on February 7, Friday.
With the American currency index in constant flux due to daily updates from US President Donald Trump, the RBI is expected to be providing measures to curtail the falling rupee.
Malayala Manorama 26th Budget Lecture today
Later on Wednesday, Dr Rajiv Kumar, former vice chairman of NITI Aayog, is set to speak at the 26th Budget Lecture hosted by Malayala Manorama at Le Méridien Kochi.
Kumar is expected to break down the Union Budget and provide his insights gained from an illustrious career as an economist. Kumar also served as the economic adviser with the Department of Economic Affairs in the Ministry of Finance between 1991 and 1995.
The latest NSO data points to slowing economic growth, that too, to a four-year low of 6.4 per cent for the current fiscal. This could be a major talking point while breaking down the Budget, especially with the market expecting a cut in benchmark policy rates from the MPC.
Retail inflation, so far, has been under RBI's tolerance level of 4 ± 2 per cent, with December rates easing to 5.22 per cent from November's 5.48 per cent. Since February 2023, the apex bank has maintained a steady 6.5 per cent in policy rates.
