Economics
India’s Huge Borrowing Binge Puts RBI in Focus: Decision Guide
- Expansionary budget is reason for policy makers to stand pat
- RBI’s support for borrowing plan, liquidity policy will be key
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Most economists expect India’s central bank will hold interest rates for a fourth straight meeting this week as attention turns to how it’ll react to an expansionary budget and a massive government debt plan.
Finance Minister Nirmala Sitharaman’s annual budget on Feb. 1 emphasized spending to revive growth in an economy hurt by the coronavirus pandemic. That would give some comfort to the Reserve Bank of India, which did most of the heavy lifting in the past year through 115 basis points of interest-rate cuts and ensuring liquidity in the financial system.