Indian Economists Meet With Central Bank About Slowdown

Indian economists met with the chief of the Reserve Bank of India on Tuesday (Mar. 19) to suggest a monetary policy boost, aiming to encourage growth amid concerns over an economic slowdown, according to a report by Reuters.

Reserve Bank of India Governor Shaktikanta Das met with more than 12 economists leading up to the Monetary Policy Committee (MPC) decision, which has to be made on April 4.

Economists are expecting the MPC to cut the repo rate by a margin of 25 basis points, down to 6 percent. The last time it was at that level was August of 2017. One economist called for an even bigger rate cut, by 50 basis points.

“Most of the participants said that monetary policy needs to do the heavy lifting to boost growth, as there was no space for fiscal expansion,” a person at the meeting said.

Das, unlike previous governors, seems to be more communicative, dialogue-driven and open to larger meetings.

The Indian economy has hit a snag recently; it only grew by 6.6 percent during the months of October through December, which was the slowest growth in five quarters. Economists blamed a slowdown in consumer demand and investments. The state of the economy weakens the position of current Prime Minister Narendra Modi, who is seeking reelection next month. The slowing economy also affects tax collection and the government’s ability to spend more.

Despite the large amount of people in attendance, the meeting didn’t give any indication of what Das or other bank officials want to do moving forward. While the economists touched on topics like drought, real interest rates and inflation, the officials did not.

“The meeting went on for two-and-a-half hours, as there were many participants,” someone in the meeting told Reuters. “But they didn’t say a single word on these topics.”

The economists said the slowdown has hurt exports, and that outbound shipments were slowing.

“Overall, the view was that the downside risks to growth have increased since the last policy, while inflation risks have remained muted,” another participant said. “Not many of us clearly specified how much rate cut we wanted, but we presented the facts to make it clear to RBI that there was a need for a big boost to the economy.”