Wednesday, October 4, 2017

Communist alliance in Nepal; RBI lowers growth forecast in India

Communist parties form alliance for upcoming polls


Two major leftist forces-CPN-UML and CPN (Maoist Centre), along with the Babu Ram Bhattarai-led Naya Shakti Party-Nepalformed a broad electoral alliance ahead of the upcoming provincial and federal elections. They also agreed to form an eight-member panel that would work for a formal merger of the three parties at the earliest.

Meanwhile, Nepali Congress, which was taken by surprise by the latest political development, is considering a democratic alliance including Terai-based parties.


RBI keeps policy rate unchanged but lowers growth forecast


Anticipating upside risks to retail inflation, Reserve Bank of India (RBI)  kept interest rates unchanged at 6% on October 4. It sees upside risks to inflation coming from farm loan waivers, tates’ implementation of pay commission allowances, and price revisions following GST and rising international crude prices. The RBI expects inflation to rise from its current level and range between 4.2-4.6 per cent in the second half of FY2018 (ends March 2018). In August, the RBI slashed the repo rate by 25 basis points (bps). The central bank's medium-term target for CPI inflation is 4% (+/- 2%).

Gross value added (GVA) growth forecast is lowered to 6.7% from 7.3% owing to the adverse impact of GST implementation particularly on manufacturing activity; investment squeeze due to stressed balance sheets of banks and corporates; lower than expected kharif foodgrains output (deficient and uneven pattern of south-west monsoon);  

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