The Reserve Bank has made it clear inflation in India continues to be sticky. But it’s also saying there are threats to growth. RBI’s macroeconomic report for the quarter came out a day before its crucial monetary policy review. RBI said baseline inflation remained broadly unchanged despite the monetary tightening. It also conceded that the tightening had contributed to a slowdown in investment demand. But it also cited other factors like global economic uncertainty. RBI concluded the pipeline of investment was shrinking make future growth prospects dimmer.
In other news, India is on its way towards getting a new and improved aviation regulator. The government is working on a bill to overhaul the current regulator DGCA and create a Civil Aviation Authority. Among other things, the new organisation will have greater authority to regulate ticket prices. It will also be able to hire from a wider array of candidates. What’s more, the new regulator will be more financially independent. In contrast, the DGCA is just an office connected to the civil aviation ministry. The proposed Civil Aviation Authority takes of many of its ideas from a UK authority with the same name.
And finally, Indian markets were on the rebound on Monday, with investors getting more optimistic about the Euro zone crisis. The Sensex jumped 154 points to 16,939. And the Nifty climbed 48 to 5,098.