The Finance Ministry of India has said that the Reserve Bank of India’s (RBI) recent actions might have slowed down the country’s economy. They believe that the RBI’s decisions, along with other factors, have reduced people’s desire to buy things.
What Did the Finance Ministry Say?
In a recent report, the Finance Ministry noted that the RBI’s way of managing money, combined with other issues, may have caused people to spend less. They also mentioned that fewer jobs and careful spending by companies have added to this problem.
How Has the Economy Been Doing?
India’s economy grew by 5.4% between July and September 2024, which is the slowest growth in seven quarters. This slowdown has led to calls for the RBI to lower interest rates to help the economy grow faster. However, the RBI has kept the rates the same for almost two years, focusing on controlling rising prices instead.
Changes at the RBI
Earlier this month, Sanjay Malhotra became the new leader of the RBI, replacing Shaktikanta Das. Malhotra is expected to support lowering interest rates to boost economic growth. Some experts think the RBI might reduce rates in February 2025, but global uncertainties could make this decision difficult.
What Is the Cash Reserve Ratio (CRR)?
The CRR is the percentage of money that banks must keep with the RBI. In December 2024, the RBI lowered the CRR from 4.5% to 4%. This change means banks have more money to lend, which can help businesses and people borrow more easily.
Looking Ahead
The Finance Ministry believes that the economy will do better in the second half of the financial year 2024-2025. They expect more people to spend money during festivals and in rural areas. However, they also warn that problems in the world economy could affect India’s growth.
Conclusion
The Finance Ministry thinks that the RBI’s recent actions may have slowed down India’s economy. With new leadership at the RBI and possible changes in interest rates, there is hope for faster growth in the coming months. However, challenges in the global economy mean that everyone needs to work together to keep India’s economy strong.
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