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News: For last two years, India has been witnessing the fiscal and monetary expansion measures. Recently, the Reserve Bank of India (RBI) has adopted a monetary policy. It aims to prioritize price-control or inflation in India.
What is the meaning of shifting of red lines in the article?
It refers to a situation when the policymakers push limits beyond economic, geo and domestic politics during uncertain times.
Why red lines have shifted and become blurred in India in last two years?
In India, the ultra-loose policies have been adopted for providing relief amid pandemic.
The central banks have lent money at negative real rates of interest for long periods. In addition, the lending charges have been below inflation.
The Reserve Bank of India (RBI) has also kept its repo rate at 4% for nearly two years.
What measures have been taken by the RBI?
The RBI has given a new window for banks. Now, banks can deposit excess funds at 3.75%, without any collateral bonds.
What are the challenges in the coming period?
The retail inflation has increased. In fact, the price may flare up to an adverse level. The cautious steps need to be taken to sponge up liquidity.
In the global theatre of geopolitics. The red line seems to be highly shifting in nature. The world has witnessed a number of geopolitical conflicts in last one decade. For example, Syrian civil war, Russian’ annexation of Crimea, Russia’s invasion of Ukraine 2022.
In terms of politics, there has been a majoritarian shift in the domestic Indian politics. For example, after the 1992 demolition of the Babri mosque, the disputed Ayodhya site has been awarded for a Ram temple in 2019, and the citizenship act has created a lot of issues. So, it may impact the national bond and unity.
Source: The post is based on an article “Red lines got blurred in our triage of mega risks” published in the Live Mint on 10th April 2022.
