THE HINDU Editorial Vocabulary-June 8, 2017- Topic 1

Holding the rate: On RBI’s monetary policy decision

The Reserve Bank of India’s decision to keep the policy interest rate unchanged, and reaffirm its “neutral” policy stance, clearly indicates that policymakers at the central bank are singularly focussed on their primary remit of ensuring price stability while supporting economic growth. That the RBI’s Monetary Policy Committee has chosen to do so in the face of clamour for a rate cut, and Consumer Price Index data and the bank’s own survey of households’ inflation expectations appearing benign, points to the MPC’s determination to reassert the central bank’s independence, especially in the rate-setting realm. 

Laying out its reasoning for opting to remain “watchful”, the RBI has raised pertinent questions relating to the outlook for price stability, the foremost being whether the “unusually low momentum in the reading for April will endure”. It posits that the easing trend in inflation, excluding food and fuel, may be transient given its vulnerability to rising rural wage growth and strong consumption demand. And the elephant in the room, in the MPC’s opinion, is the real prospect of inflationary spillovers from the rising risk of fiscal slippages caused by farm loan waivers — Uttar Pradesh has set the stage, and Maharashtra’s government has vowed to come up with the State’s largest-ever. Observing that inflation has fallen below 4% only since November 2016, the RBI has reiterated its commitment to keeping the headline reading close to that figure on a “durable basis”.

The MPC acknowledges that the latest monsoon forecast augurs well for the agriculture sector, and when viewed in conjunction with continuing robust government spending, it ought to help undergird overall momentum in the economy. The RBI’s business expectations index based on its industrial outlook survey of April points to upbeat prospects for the manufacturing sector in the second quarter of the current fiscal year, spurred by rising rural and overseas demand. However, on the growth front too the RBI’s policy panel has opted for caution given that the Central Statistics Office’s GDP and GVA (gross value added) data released last month suggest that the effects of demonetisation have lingered on. The RBI has accordingly cut its GVA growth forecast for the year ending in March 2018 by 10 basis points to 7.3% and flagged the risks that global political uncertainties, rising input costs and wage pressures and the twin balance sheet problem (an over-leveraged corporate sector and stressed lenders) pose to a revival in private investment demand and a more durable economic expansion. Spelling out the priorities, the MPC has said monetary policy can be effective only when private investment has revived, the banking sector’s health is restored and infrastructure bottlenecks are removed. To do otherwise “risks disruptive policy reversals later and the loss of credibility” of the RBI.

Vocabulary

Reaffirm: state again as a fact; assert again strongly.

Example: The prime minister reaffirmed his commitment to the agreement

Clamour: a loud and confused noise, especially that of people shouting vehemently.

Example: The questions rose to a clamor

Synonyms: din, racket, rumpus, loud noise, uproar, tumult

Reassert: assert again.

Example: He moved quickly to reassert his control

Pertinent: relevant or applicable to a particular matter; apposite.

Example: She asked me a lot of very pertinent questions

Synonyms: relevant, to the point, apposite, appropriate, suitable

Transient: lasting only for a short time; impermanent.

Example: A transient cold spell

Synonyms: transitory, temporary, short-lived, short-term, ephemeral

Spillovers: an instance of overflowing or spreading into another area.

Example: There has been a spillover into public schools of the ethos of private schools

Slippages: the action or process of something slipping or subsiding; the amount or extent of this.

Example: $16 million has been spent on cracks and slippage

Reiterated: say something again or a number of times, typically for emphasis or clarity.

Example: She reiterated that the administration would remain steadfast in its support

Synonyms: repeat, say again, restate, retell, recapitulate

Undergird: provide support or a firm basis for.

Example: That's a philosophy that needs to undergird retailers' business plans this year

Upbeat: cheerful; optimistic.

Example: His speeches are upbeat and optimistic because this is the style of Michael Gove, a key Cameron adviser.

Synonyms: optimistic, cheerful, cheery, positive, confident, hopeful

Lingered: stay in a place longer than necessary, typically because of a reluctance to leave.

Example: She lingered in the yard, enjoying the warm sunshine

Synonyms: wait around, stay, remain, wait, stay put, loiter, dawdle

Bottleneck: a point of congestion or blockage, in particular.

Example: I reached Chicago at 5: 30 p.m. And spent an hour - only an hour - making my way through America's biggest bottleneck .

Disruptive: causing or tending to cause disruption.

Example: Disruptive and delinquent children

Synonyms: troublesome, unruly, badly behaved, rowdy, disorderly