{"id":4083,"date":"2022-05-27T08:14:22","date_gmt":"2022-05-27T08:14:22","guid":{"rendered":"https:\/\/goldenpi.com\/blog\/?p=4083"},"modified":"2023-06-29T08:06:03","modified_gmt":"2023-06-29T08:06:03","slug":"impact-of-hike-in-repo-rate-on-the-indian-economy","status":"publish","type":"post","link":"https:\/\/goldenpi.com\/blog\/market-view\/impact-of-hike-in-repo-rate-on-the-indian-economy\/","title":{"rendered":"Impact of Hike in Repo Rate on the Indian Economy"},"content":{"rendered":"

The Reserve Bank of India has been the primary pillar in depicting and controlling inflation, which determines the overall economic flow of the country. The RBI’s Monetary Policy<\/a> acts as a key determinant of factors such as inflation and price stability. The RBI\u2019s decision making process always revolves around the events happening around the world. The recent incident is a prime example of how, as a result of the Russia-Ukraine conflict, the entire world has been experiencing economic fluctuations, including India. Therefore, India had to face the hike in the Consumer Price Index Inflation, which stood at 6.95% in March 2022.<\/p>\n

According to the Economic concept of Monetarism, inflation could only be controlled through the money supply in the economy. Hence, in order to cool off inflation, the Indian government has planned to suck in liquidity by issuing new borrowing plans and making adjustments in the liquidity window of the RBI.<\/p>\n

Simultaneously, the Monetary Policy Committee made a few changes in its Liquidity Adjustment Facility. These changes are stated below-<\/p>\n

\"\"By making such adjustments in the policies, RBI is trying to suck out the excessive money in circulation. The bank also mentioned that they would be able to aspirate Rs 87000 crores from the economy.<\/p>\n

Inflation<\/a> is a rise in the price of an economy over a period of time. It happens when there is an excessive supply of money in the economy. It also refers to the decline in purchasing power of currency over time.<\/p>\n

Let’s understand Inflation with an example-<\/p>\n

Three years ago, if we were able to buy one ltr of petrol for Rs. 79.89, so today with an increase of around 93% in the inflation rate, the same one ltr of petrol would cost an ordinary person Rs. 105, showing an increase of 32%.<\/span><\/p>\n

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