THE HINDU Editorial Vocabulary - August 2, 2018 - Topic 1
The decision by the Reserve Bank of India’s
Monetary Policy Committee to raise benchmark interest rates again by 25 basis points is a prudent one. This is the second successive rate
increase in as many months, a response to mounting uncertainties on the
inflation front. Continuing volatility in crude oil prices, the recent
softening notwithstanding, and its vulnerability to geopolitical tensions and
supply disruptions is one of the main risks to the inflation outlook.
Among the
RBI’s other concerns are volatile global financial markets, possibilities of
fiscal slippage at the Central and State levels, the likely impact of the
increase in the minimum support price for kharif crops, and the staggered
impact of upward revisions to house rent allowance paid by State governments.
Rainfall has so far been 6% below the long-period average and deficient over a wider
area than last year — more than a fifth of the country’s 36 sub-divisions have
reported shortfalls. This has resulted in a drop in the total sown area under
kharif. The monetary authority has flagged the need to keep a close watch on
rain over the remainder of the season, given the risks regional imbalances may
pose to paddy output and CPI inflation. The June round of the RBI’s own survey
of household inflation expectations reveals that families see prices hardening
even further over both the three- and 12-month horizons. Domestic economic
activity having strengthened to a point where the output gap has ‘virtually
closed’, manufacturers polled by the central bank have reported higher input
costs and selling prices over the April-June quarter.
The portents could not be clearer. With retail
inflation having accelerated to 5% in June, the RBI has revised its projection
for CPI inflation in the second half of the current fiscal year to 4.8%, from
the June forecast of 4.7%, and now sees price gains accelerating to 5% in the
April-June quarter of 2019. Policymakers on the MPC have understandably
spotlighted the risks to the domestic economic rebound from global
developments. While rising trade protectionism threatens to impact investment
flows, disrupt global supply chains and hurt all-round productivity,
depreciations in the value of most currencies against the strengthening dollar
have rippled through many major advanced and emerging economies, spurring
inflation across these markets. The MPC’s primary remit is to ensure that
retail inflation stays firmly within a band of 2-6%, and preferably anchored at
4% over the medium term. So there is no room to quibble over the committee’s
majority decision to raise borrowing costs while retaining a ‘neutral’ policy stance.
With inflation widely accepted as a hidden tax on the poor, the containment of
price gains justifiably ought to be the raison d’etre of monetary
policy.
Vocabulary
Benchmark: a
standard or point of reference against which things may be compared or assessed.
Example: A
benchmark case
Synonyms: standard, point
of reference, gauge, guide, guideline, guiding principle
Prudent: acting
with or showing care and thought for the future.
Example: No
prudent money manager would authorize a loan without first knowing its purpose
Synonyms: wise, sensible, politic, judicious, sagacious, sage, shrewd
Uncertainty: the
state of being uncertain.
Example: Times
of uncertainty and danger
Synonyms: unpredictability, unreliability, riskiness, chanciness, precariousness
Notwithstanding: nevertheless;
in spite of this.
Example: She
tells us she is an intellectual; notwithstanding, she faces the future as
unprovided for as a beauty queen
Synonyms: nevertheless, nonetheless, even
so, all the same, in spite of this, despite this
Vulnerability: the
state of being exposed to contact with something.
Example: The
dangers posed by exposure to asbestos
Synonyms: subjection, laying
open
Slippage: 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
Stagger: walk
or move unsteadily, as if about to fall.
Example: He
staggered to his feet, swaying a little
Synonyms: lurch, walk
unsteadily, reel, sway, teeter, totter, stumble, wobble
Imbalance: lack
of proportion or relation between corresponding things.
Example: Tension
is generated by the imbalance of power
Synonyms: disparity, variance, variation,
disproportion, lopsidedness
Portents: a
sign or warning that something, especially something momentous or calamitous,
is likely to happen.
Example: They
believed that wild birds in the house were portents of death
Synonyms: omen, sign, signal, token, forewarning, warning, danger
sign, foreshadowing
Depreciation: a
reduction in the value of an asset with the passage of time, due in particular
to wear and tear.
Example: The
former is intended to compensate the host railway for depreciation of the fixed
assets associated with use by other railways.
Synonyms: devaluation, devaluing, decrease
in value, reduction in value
Retain: continue
to have something
Example: Built
in 1830, the house retains many of its original features
Synonyms: keep, keep
possession of, keep hold of, hold on to, hang on to
Containment: the
action of keeping something harmful under control or within limits.
Example: The
containment of the AIDS epidemic
