Now that elections are over, the RBI is expected to slash rates
Image Source: Hindustan Times

A strong government at the centre must focus on improving the health of the economy and other fundamental factors

India has elected its 17th Lok Sabha members and has given the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) a clear mandate to form a strong government at the centre.

Prime Minister Narendra Modi is set to return for another term and will be taking the oath on 30th May 2019.

Now that we have a strong government at the centre, the focus must shift towards economic development and other fundamental factors.

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The Reserve Bank of India (RBI) is expected to slash the interest rates to encourage consumption. The review of the monetary policy is being done on 3rd, 4th and 5th June 2019.

Apart from the interest rates, we can expect RBI to inject more liquidity into the economy. A significant step towards achieving this is recapitalising Public Sector Banks (PSBs).

The RBI in its previous reviews, in April and February 2019, cut interest rate by 25 basis points to boost the economic growth. The RBI had cautioned about the impact of slowing global economy on India.

The retail inflation was 2.8% in the last quarter of 2018-19, and it was revised to 2.4% in February 2019 policy meeting. The monetary policy committee (MPC) in April 2019 said that the consumer price inflation in February was lower than expected.

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