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Subsidised credit from the government and the RBI has not proved to be a sustainable source in the past. Moreover, the bond market in India is still awaiting reforms.
Inflation has been consistently over 6% over the last few months on account of rising food prices and supply constraints. It touched a 77-month high of 7.6% in Oct.
The US treasury has placed India under the currency manipulator watchlist. It says India intervened in the FX market in a sustained, asymmetric manner.
The IFSC regulator has approved banking regulations for IBUs. It has allowed resident Indians, with a net worth of not less than $1 million, to invest in IBUs.
For most of this year, RBI has capped currency gains as global investors poured around $50 billion into stocks and stakes in companies.
A consumer-price inflation band tracked by RBI may be relaxed further from the current 2%-6% range when it comes up for review next year.
The Finance Minister said the current reflation is sustainable and consistent GST collections for two months and industry expansion plans indicate additional demand in the economy
RBI restricted HDFC Bank from launching new digital banking activities and issuing credit cards. Governor Das says IWG proposal on corporates in banking independent of RBI.
GDP numbers for Q2 were better than expected, but growth could still be hit by resurgence of Covid. Persistent supply-side inflation is a problem too.
To expect the RBI to effectively monitor multiple aspects of the banks and other regulated entities is a tall order.