Economy

The repurchase rate was reduced by 25 basis points to 6.25 per cent, a decision predicted by just 11 of 43 economists surveyed by Bloomberg News, with the rest expecting no change.

The RBI's central board meeting will take a call on the amount of interim dividend to be paid by the bank to the government.

The RBI projected GDP growth to be in the range of 7.2-7.4 per cent in the first half of the next fiscal beginning April, and at 7.5 per cent in the third quarter "with risks evenly balanced".

The central bank also decided to set up an internal working group (IWG) to review agricultural credit and arrive at a workable policy solution.

RBI said the short-term outlook for food inflation appears particularly benign, despite adverse base effects.

The repo rate - which is the key interest rate at which the RBI lends short-term funds to commercial banks - now stands at 6.25 per cent.

The monetary policy committee (MPC) cut the repo rate by 25 basis points to 6.25 per cent, as predicted by only 21 of 65 analysts polled by Reuters.

In a surprise move, the Reserve Bank of India (RBI) on Thursday reduced the repo rate by 25 basis points or 0.25 per cent. The central bank also changed its policy stance to "neutral" from "calibrated tightening". The repo rate - which is the key interest rate at which the RBI lends short-term funds to commercial banks - now stands at 6.25 per cent. The cut in repo rate may lead to lower EMIs for home and auto loan borrowers, say analysts. The central bank had last lowered the repo rate in August 2017. The government said the policy action would aid economic growth and employment opportunities.

The Reserve Bank of India (RBI) will today conclude the three-day meeting of its Monetary Policy Committee (MPC) and release its sixth bi-monthly statement for 2018-19. Today's statement from the central bank will mark the first under Governor Shaktikanta Das, who took office nearly a week after the last policy meet on December 5 by his predecessor Urjit Patel. With inflation well within the RBI's medium-term target, analysts will closely watch any announcement on the key lending rate - or repo rate - and signs of easing policy in the coming months. Many economists expect the RBI to maintain status quo on the rates while some see a change in policy stance.

With Rs 36,000 crore additional borrowings, the government will now raise a total of Rs 96,000 crore in the remaining period of the fiscal year.

The banking sector has been under massive stress in the last few years as lenders have struggled with about $150 billion of bad loans.

The Indian government expects the central bank to pay a dividend of Rs 69,000 crore in the next financial year beginning April 2019.

At Thursday's MPC meeting - the first for RBI Governor Shaktikanta Das - it will be tough to balance desire to support economic growth with the need to contain inflationary expectations.

"I think the Committee may maintain its stance to neutral but I'm not expecting a rate cut," said Rajnish Kumar.

In April-November, the country's fiscal deficit was Rs 7.17 lakh crore, or about 115 per cent of the budgeted target.