Oct 18 (Reuters) - The minutes of India’s newly appointed Monetary Policy Committee (MPC) meeting, released on Tuesday, showed that broad concerns over economic growth and relief from the pullback in inflation, spurred the bank’s recent rate cut decision.
Here are edited excerpts from the views of the six members.
** Indicators of economic activity pointed to a subdued outlook, though gradually improving.
** Low capacity utilisation and persistence of the output gap suggested pricing power is likely to remain low.
** Some confidence that the inflation target of 5 percent for March 2017 can be achieved.
** Calibrated policy judgement was warranted as some space for policy action opened up with the fall in August inflation.
** Inflation outcomes in Jan-March will have to be carefully and continuously monitored as upside risks albeit lower than before, persist.
** Risks to inflation from global factors may be easing
** Maximum comfort coming from softening pulse prices, good monsoon to further help in taming food inflation.
** Supply management by the government will be critical to influence space for monetary policy actions.
** While the pace of economic growth expected to gain gradual momentum, private investment cycle remains depressed.
** Rate cut to help in stimulating investment demand while also easing pressure on balance sheets of companies.
** Several parts of economy languishing, but other parts mending and coming together for a potential revival.
** Level of inflation forecast for Jan-March 17 is closer to target than before.
** Not to say that the inflation beast has been beaten or its back broken, but there is a turn in its momentum that is exploitable.
** Crucial, however, to step up vigil around the upturn in inflation projected in the last quarter of 2016-17.
CHETAN GHATE, ASSOCIATE PROFESSOR, INDIAN STATISTICAL INSTITUTE:
** Persistence of core inflation remains a concern
** Upside risks to meeting 5 pct CPI inflation by March 2017 remain, but these are acceptable risks.
** Expectations of future inflation closer to target, expected to contribute to low and stable inflation
** Signs of revival of economic activity, which needs to be nurtured.
** With persistent slack in the economy on unutilised capacity, corporate pricing power remains weak.
** Modest softening of inflation and inflation expectations, lacklustre private investment spending and unused capacity provides window for policy rate cut.
** Good time to support growth by reducing the policy rate.
RAVINDRA DHOLAKIA, PROFESSOR, INDIAN INSTITUTE OF MANAGEMENT:
** Probability of inflation turning up from the current level reasonably less.
** Good chances for consumer inflation to soften further substantially on good monsoon, government steps.
** Potential growth path of Indian economy gradually moving up, particularly in response to government reform measures.
** Do not see major risk to inflation if output gap closes fast as there is substantial under-utilisation of capacity. (Compiled by Devidutta Tripathy; Editing by Louise Ireland)