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RBI cuts interest rate by 25 bps

Changes stance to accommodative; cuts FY20 growth projection to 7%

The benchmark interest rate of the Reserve Bank of India (RBI) fell below 6% for the first time since 2010 as the central bank’s monetary policy committee (MPC) cut repo rates by 25 basis points (bps) to 5.75% in order to address growth concerns.

The stance of the policy has also been changed from neutral to accommodative, which means a hike in interest rates is ruled out.

Decision unanimous

The decision to cut interest rate was unanimous among the MPC members. “The MPC notes that growth impulses have weakened significantly as reflected in a further widening of the output gap compared to the April 2019 policy,” the RBI said.

The RBI has revised GDP growth projection for the current financial year from 7.2% to 7%. “The headline inflation trajectory remains below the target even after taking into account the expected transmission of the past two policy rate cuts,” RBI Governor Shaktikanta Das said at the media interaction. “Hence, there is scope to boost aggregate demand and, in particular, private investment activity, while remaining consistent with the mandate of flexible inflation targeting,” he said.

The path of consumer price index based inflation has been revised downward to 3.4%-3.7% in the second half of the current fiscal.

Rajnath inducted into Cabinet panel following controversy

Defence Minister earlier left out of CCPA due to ‘oversight’

Rajnath Singh

Prime Minister Narendra Modi — after setting up two Cabinet sub-committees for economic growth and investment, and for jobs and skills — reconstituted six other Cabinet sub-committees on Thursday.

A piquant situation arose with the formation of these committees after the Cabinet Secretariat issued an amendment on these sub-committees, adding Defence Minister Rajnath Singh’s name to the Cabinet Committee on Political Affairs (CCPA) as well as the committees on jobs and economic growth.

The late amendment was an attempt by the government to undo some of the damage after Mr. Singh, despite being number two in the government as per protocol, found himself excluded from these crucial committees, raising a question over a new pecking order in the government with Home Minister Amit Shah as the de facto number two.

Government sources were mum on why Mr. Singh was excluded in the first place, but said his exclusion from the CCPA and the Cabinet Committee on Parliamentary Affairs was an oversight that was corrected.

The other major presence in most of these sub-committees is Finance Minister Nirmala Sitharaman.

Allies find a place

In the CCPA, apart from heavyweight Ministers from the BJP, NDA allies like Food Minister Ram Vilas Paswan, Food Processing Minister Harsimrat Kaur Badal and Heavy Industries Minister Arvind Sawant find a place.

Speaker endorses merger of 12 Cong. MLAs with ruling TRS

They will now sit with TRS legislators

Policemen outside the Assembly in Hyderabad on Thursday. K.V.S. Giri THE HINDU

In a major setback to the Congress in Telangana, the 12 party MLAs who defected to the TRS were recognised as members of the ruling party by Assembly Speaker Pocharam Srinivas Reddy on Thursday.

The decision came hours after they met him and sought merger of their group with the TRS Legislature Party (TRSLP), claiming themselves to be the representatives of the Congress Legislature Party (CLP).

Later in the day, the Speaker acceded to the demand of the 12 MLAs, considering the fact that they constituted two-thirds of the total number of 18 MLAs.

Accordingly, seats were allotted to them along with TRS members in the House.

Unless the merger is reversed, the Congress is set to lose its status of Opposition party in the Assembly as its strength has come down to six.

AIR may have to power off short wave transmissions

It began international broadcasting in 1939

Short wave is the only effective way to reach any part of the world, AIR administrators say.V.V.KrishnanThe Hindu

If Prasar Bharati has its way, All India Radio will have to stop all global short wave (SW) transmissions — 80 years after it began international broadcasting in 1939. AIR is resisting the move arguing that it will curtail its global reach.

There are about 46 SW transmitters that beam both domestic and external services. Of these, 28 are used for external services alone. Barring three that were recently installed, all the others will have to be shut down over the next six months. The external services go out to 150 countries in 13 Indian languages and 15 foreign languages.

Prasar Bharati wrote to AIR in the third week of May asking for a proposal to phase out SW transmitters.

‘Whimsical decision’

A high-ranking AIR official called it a whimsical decision. “There will be a huge implication for external services. Short wave is the only effective way to reach any part of the world. FM and other modes don’t work. Even live streaming on web can’t be a substitute due to varied penetration of internet connectivity. Any country that wants to scuttle Indian radio can just shut down our web channel.”

No impact

Prasar Bharati CEO Shashi Shekhar Vempati denied that discontinuing SW will impact global outreach. He said there would be fresh investments in DD India, AIR World Service and Prasar Bharati’s Gobal Digital Platform.

“Going forward, AIR world service will be primarily a digital service leveraging FM and medium wave capabilities where available and short wave in a limited way for strategic purposes. We will explore hiring air time in transmitters outside India where feasible,” he told The Hindu.

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