&w=3840&q=100)
RBI rate cuts still possible despite neutral stance, says MPC member
The change from 'accommodative' to 'neutral' in the June 6 policy does not 'preclude further rate cuts. Absolutely not,' said Saugata Bhattacharya, an external member of the monetary policy committee of the Reserve Bank of India, in an interview Wednesday.
'If inflation allows a further cut in the policy repo rate, so be it,' he added. A good monsoon and easing vegetable prices support a benign inflation outlook, with global food prices contained and edible oil prices declining, he said.
Bhattacharya was the only rate-setter to vote for a quarter-point cut in the last monetary policy decision, where the central bank delivered a bigger-than-expected interest rate cut along with a cash boost for banks to spur growth
Despite the liquidity boost, the RBI on Tuesday announced a plan to withdraw up to 1 trillion rupees ($11.7 billion) through short-term measures.
Bhattacharya said the immediate liquidity withdrawal was necessary because overnight rates had fallen below the floor of the RBI's rate corridor, warranting calibration.
'Managing liquidity down to the last rupee is always a very difficult proposition,' due to multiple unpredictable and constantly evolving factors such as government cash balances, currency in circulation, global capital flows, and RBI's market interventions, he said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hindu
16 minutes ago
- The Hindu
Bengaluru to get 4,500 electric buses under PM e-Drive scheme
The city is set to receive a significant boost in green public transport with the allocation of 4,500 electric buses under the Union government's PM e-Drive scheme. The development follows a nationwide tender floated by the Centre-owned Convergence Energy Services Ltd (CESL), which falls under the Gross Cost Contract (GCC) model as per the Ministry of Heavy Industries guidelines. The CESL tender, issued last month, aims to procure, operate, and maintain 10,900 electric buses across five major cities, with Bengaluru alone slated to receive the largest share. The tender also covers the development of supporting infrastructure such as charging stations and related civil works. The Karnataka government had submitted a formal proposal in May, seeking the inclusion of the State in the Centrally sponsored scheme. Transport Minister Ramalinga Reddy had personally submitted the request to Union Minister for Heavy Industries and Steel H.D. Kumaraswamy, highlighting the urgent need to improve public transport in urban areas like Bengaluru. Responding to the State's request, Mr. Kumaraswamy had earlier assured that Karnataka would 'definitely' be allocated buses under the scheme. The PM e-Drive initiative, with a budget outlay of ₹10,900 crore, aims to deploy 14,028 electric buses across nine major Indian cities between April 2024 and March 2026. Discussions between the Centre and participating State governments are ongoing to finalise plans for the necessary infrastructure, including bus depots, charging points, and maintenance facilities. In September 2024, the Union Cabinet approved a scheme with a total outlay of ₹10,900 crore to support the procurement of electric buses and the installation of over 72,000 charging stations across cities and highways, aiming to reduce 'range anxiety' among electric vehicle users. The scheme will allocate a total of ₹4,391 crore for the procurement of 14,028 electric buses by State transport undertakings in nine cities with population exceeding 40 lakh, including Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Surat, Bengaluru, Pune, and Hyderabad.
The Hindu
16 minutes ago
- The Hindu
Air India crash: the cost of risk in modern aviation
On June 12, an Air India (AI) Boeing 787-8 Dreamliner bound for London tragically crashed shortly after takeoff from Ahmedabad. The disaster claimed 241 lives on board and 19 more on the ground, leaving only a single survivor. It is one of the deadliest air disasters in Indian history and potentially, its costliest. Quantifying disaster Industry analysts estimate the total insurance payout could start at about $120 million and rise beyond $150 million with worst-case projections nearing $250 million. The hull loss (the value of the destroyed aircraft) alone, a Boeing 787's market value, accounts for $75–80 million. Passenger liability under the Montreal Convention adds another layer: airlines are strictly liable up to 1,51,880 SDR (roughly ₹1.5–₹1.8 crore) a passenger, or more if negligence is proven. For 241 lives lost, this would be at least ₹360–₹430 crore in no-fault compensation. On top of that third-party claims related to ground fatalities and property damage are still being quantified. The final payout will hinge on investigation findings and liability outcomes and full settlement could take several months or even years. But the sum far exceeds India's entire annual aviation insurance premium pool (₹1,000–₹1,100 crore), highlighting scale of catastrophic financial exposure. Risk, vulnerability AI's risk is distributed across a huge insurance programme, reportedly underwritten for about $20 billion at an annual premium near $30 million. Domestic insurers — Tata AIG and New India Assurance— lead the front-line underwriting, but retain only about 5–10% of the risk. The balance is ceded to global reinsurers in London, Europe and U.S. This global allocation helps distribute risk. This catastrophe is already prompting a 'hardening' of global premiums — rates for hull, war risk and liability cover may rise by 10–30% in next renewal cycle. This layering of risk extends even further through retrocession, a system where reinsurers themselves offload part of liability to other entities. Retro helps limit exposure during extreme-loss events like aviation disasters and earthquakes. The retrocession market is global and complex, comprising traditional reinsurers like Swiss Re and Munich Re, Lloyd's syndicates, ILS (insurance-linked securities) funds, and catastrophe bond investors. For instance, if a reinsurer faces a $300 million liability in an aviation crash, it might have already ceded $200 million of that to retrocessionaires. This ensures resilience and shows how widely the shock of a single incident is distributed across the global insurance ecosystem. Cost ripples Underwriters' increased premiums will inevitably hit airline cost structures, particularly for carriers operating Boeing 787s, including AI, SpiceJet and Akasa. A 10–30% annual rate hike applies to a policy priced at about $30 million. Due to tight margins, the costs may be passed on via ticket prices, narrower service buffers, fleet-replacement delays or even restrictively high-risk route economics. Most travellers are unaware of how little personal insurance provides compared with airline liability. Less than 3% of Indians hold personal accident cover and most travel plans rely on airline compensation or ad hoc ex-gratia payments during claim processing. Tata Group announced a ₹1 crore compensation for each of the families of the victims. In addition, it is providing interim relief of ₹25 lakh to each affected family or survivor bringing total immediate support to ₹1.25 crore per family ahead of any additional compensation processed under international conventions or via insurance settlements. Building endurance Insurers may consider enhancing risk modeling practices — factoring in variants, operational routes especially given the war risk that seems to be going on forever, and local infrastructure. The outcome of the investigation may lead to a second layer of variables to be considered which aren't today. On the consumer side, greater awareness around passenger rights under the Montreal Convention, value of personal accident insurance and adequate life insurance could help bridge current gaps. Increasing the uptake of insurance products — not just for passengers, but also for businesses and properties on the ground that are often left uninsured — can play a crucial role in strengthening overall resilience. It's a necessary step toward ensuring future disasters don't escalate into wider financial or humanitarian crises. (The writer is head, Policybazaar For Business)
Economic Times
16 minutes ago
- Economic Times
IPO rush, block deals fuel two-fold jump in market fundraise
Agencies Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel ET Intelligence Group: The fund mobilisation through bulk and block (B&B) deals in the Indian equity market improved sharply in the June 2025 quarter according to the data from Equirus Capital following a recovery in the broader market after a slow start in the previous quarter. Sequentially, it increased by 118.9% to ₹1.7 lakh crore while staying muted year-on-year at 3.3% rise. The total funds mobilised through various routes including B&B, initial public offerings (IPO), qualified institutional placements (QIP), and rights issues rose by 103.5% sequentially and by 10.8% year-on-year to ₹2.2 lakh crore."The sharp rebound in equity fund raising this quarter is directly tied to the recovery in secondary market sentiment," said Bhavesh Shah, managing director and head of investment banking at Equirus also reported renewed rigour in issuance. Money raised through this route increased by 88.6% sequentially to ₹29,652 crore. Also, funds through rights issue jumped fourfold to ₹7,644 crore by similar comparison, reflecting companies' eagerness to shore up balance sheets through shareholder-backed this uptick was a marked improvement in investor sentiment. The BSE Sensex rallied nearly 10% in the April-June period, buoyed by robust foreign and domestic inflows. This was in comparison with the 1.4% drop in the corresponding quarter of the previous year. Foreign portfolio investors, who withdrew ₹1.2 lakh crore in January-March 2025, flipped to net buyers, pouring in ₹38,673 crore during April-June, according to NSDL data."IPO investors are typically active in the secondary market as well. So, when markets are underperforming, it not only affects their existing portfolios but also dampens their appetite for new investments," said Shah. He expects the current momentum in fund raising to continue as long as the secondary market remains stable and domestic inflows stay strong,Though the total transaction value of B&B deals improved sequentially, their number fell to 3,003 in the June quarter from 3,461 in the previous quarter reflecting higher average size per deal.
