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The Reserve Bank of India (RBI) left the main policy instrument, repo rate, unchanged at 6.50 per cent for the second consecutive monetary policy, giving relief to home, vehicle and other retail borrowers from an increase in equated monthly instalments (EMIs).
The decision to keep the repo rate — it is the interest rate at which the RBI lends to banks in the country — unchanged was taken unanimously by the six Monetary Policy Committee (MPC) members as inflation continues to remain above the 4 per cent target. The RBI has been mandated by the government to keep consumer price index-based inflation (CPI) at 4 per cent with a band of +/- 2 per cent.
In a 5:1 majority, the rate-setting panel also decided to remain focused on withdrawal of accommodation. In the April 2023 policy, the RBI had paused its rate hike cycle after raising the key lending rate for six consecutive times since May 2022.
The RBI retained the real GDP growth projection at 6.5 per cent for FY2024 but cut the inflation projection marginally from 5.2 per cent to 5.1 per cent for the current fiscal.
The City
ASI stumbles upon 13th Century tomb-like structure in Siri Fort (Page no. 7)
(GS Paper 1, Culture)
A tomb-like structure was accidentally discovered in the Siri Fort area while the Archaeological Survey of India (ASI) was carrying out renovation work at the Siri Fort Children’s Park around three months ago.
ASI officials said the opening of the arched structure has been discovered and no further excavation will be conducted to dig out the rest of the structure, which still remains buried.
The structure will be kept intact to showcase it to the children who visit the museum and to explain to them how half-buried structures are discovered.
No large-scale excavation will take place,” said Praveen Singh, Superintending Archaeologist of the Delhi Circle of ASI.
Siri Fort was built in the 13th Century by Alauddin Khilji, considered to be the most powerful ruler of the Khilji dynasty. It was used as a garrison town where his army used to reside. Hauz Khas village was an extension of the fort, which was designed to meet the water needs of the army.
The fort is currently in ruins and the only structure that remains is its boundary walls,” said author-historian Sohail Hashmi, who also conducts heritage walks in Delhi.
Editorial
A Manipur dead end (Page no. 12)
The continuing violence in Manipur ought to be shocking for many reasons. But its sheer scale, endurance and brutality is still not getting national attention.
As is typical, the prime minister who is never shy of taking leadership credit, is completely absent when there is an actual crisis that goes to the heart of both constitutional values and national security. In this instance, it seems like the double-engine sarkar, even after invoking Article 355, is unable to control the violence.
It takes nothing away from the culpability of the present dispensation to acknowledge the long-standing and irresolvable contradictions of Manipur politics.
Whenever the central organising axis of politics is a distributive conflict between identity-based groups, there is a high chance of violence.
This is particularly the case where the conflict inherently has the character of a zero-sum game. In Manipur, the politics of distribution between Kukis and Meiteis turns on four goods whose inherent logic is zero-sum.
The first is inclusion in the ST quota which is the proximate background to the current conflict. By its very nature, the inclusion of more groups in the ST quota will be a threat to existing beneficiaries.
The second is land, and the tension between the valley and the hills. This is also a zero-sum resource, where protecting the land rights of Kukis is seen as foreclosing the opportunities for other groups. The third is political representation, where historically Kukis have felt dominated by the Meiteis.
Ideas Page
Forecast is still cloudy (Page no. 13)
(GS Paper 1, Geography)
The Monetary Policy Committee of the Reserve Bank of India (RBI) has preferred to stand put than surprise the way it did in April. That is par for the course. The inflation print for the last two months seems to indicate that the peak has been passed:
The wholesale price index (WPI) inflation fell to -0.9 per cent in April from 1.3 per cent in March, while the consumer price index (CPI) inflation declined to 4.7 per cent from 5.7 per cent. We expect the pause to continue through 2023.
The RBI has communicated that its fight against inflation is not over till it is aligned with its target of 4 per cent on a durable basis. This implies it will not be in a hurry to cut rates. We foresee a rate cut only in January-March 2024.
While a likely end of the rate hike cycle in advanced countries over the next couple of months will help, softening domestic inflation is swaying Mint Road. Additionally, the withdrawal of Rs 2,000 bank notes, 50 per cent of which have been returned, is expected to inject liquidity into the system.
Express Network
Safety first, won’t rush to meet deadline: ISRO chief on Gaganyaan (Page no. 14)
(GS Paper 3, Science and Technology)
In a clear indication that it needed more time to execute Gaganyaan, the human spaceflight programme, the Indian Space Research Organisation (ISRO) said the safety of astronauts was far more important than target dates.
Speaking on the sidelines of an international conference on Spacecraft Mission Operations (SMOPS-2023), ISRO chairman S Somnath said the space agency had planned additional test flights before a human crew was used.
We have a different way of thinking now. The thinking is that we do not want to rush the decision. The primary objective of human space flight is sureshot, safe mission.
We have redefined it in such a way that we will achieve success in the very first attempt,” Somnath said about the proposed Gaganyaan mission.
There are eight major tests and if all eight major tests happen successfully without any major glitch then the launch could be happening in a 2024 time frame but if I face problems and challenges, which is natural in this process, then I have to discount the schedule.
The human spaceflight mission had initially been given a 2022 target by the Centre to coincide with 75 years of Indian independence but the programme was thrown out of gear by the Covid pandemic, which engulfed the country between 2021 and 2022.
Due to the pandemic, we had a huge delay in what we wanted to achieve because it was not a production launch. We have to engineer it and work with industry so it was not possible for one and a half years. So, we missed the schedule. We could not align the programme with the Amrit Mahotsav (75 years of Independence).
Explained
The US-China thaw (Page no. 18)
(GS Paper 2, International Relation)
As Prime Minister Narendra Modi prepares for his June 21-24 official state visit to Washington DC, India and the United States are said to be looking at “consecrating” their relationship premised on greater alignment of goals in Asia and the Indo-Pacific.
At the same time, the US appears to be inching towards a detente with China. After months of trying, Secretary of State Antony Blinken may be finally welcomed in Beijing in the coming weeks for what American media are describing as an effort by the Biden Administration to ease strained ties.
Blinken called off a scheduled visit to China in February after a Chinese high-altitude balloon appeared above the US, and was ultimately shot down on President Joe Biden’s orders.
The Pentagon said the balloon was a spying device, while China claimed it was a research airship that had blown off-course.
US-China tensions have been high since the time of the Covid-19 outbreak. China’s suspicion that the Quadrilateral Security Dialogue is a mechanism to contain it in the Indo-Pacific, and the proactive US positioning on Taiwan — with then Speaker Nancy Pelosi’s August 2022 visit — did not help matters.
But over the last couple of months, the US has made efforts to reschedule Blinken’s visit — even as the Chinese have played hard to get.
At the annual Shangri La Dialogue last week, Chinese Defence Minister Li Shangfu — whom the US has sanctioned — refused a meeting with Defense Secretary Lloyd Austin.
Biparjoy (Page no. 18)
(GS Paper 1, Geography)
A cyclonic storm, named Biparjoy, has developed in the Arabian Sea. On Thursday (June 8) afternoon, it was stationed about 850 km west of Goa and 900 km southwest of Mumbai.
The cyclone is predicted to gain in strength over the next three days and develop into a very severe cyclonic storm by June 13.
According toan Indian Meteorological Department (IMD) advisory, the cyclone would result in squally weather with wind speeds reaching 35-45 kmph along the coastline of Karnataka, Goa and Maharashtra.
The IMD has not yet predicted any major impact on countries adjoining the Arabian Sea, including India, Oman, Iran, and Pakistan.
But the cyclone is expected to keep the monsoon a little subdued. The IMD announced the onset of the monsoon on Kerala coast, eight days behind normal schedule, but its northwards progression in the interiors of the mainland could be stunted.
The IMD said monsoon could progress to some more parts of central Arabian Sea, remaining parts of Kerala, some parts of Tamil Nadu, some parts of Karnataka and some parts of the northeastern states during the next 48 hours.
What RBI MPC’s rate hike pause means for EMIs and investors (Page no. 18)
(GS Paper 3, Economy)
To the relief of borrowers and markets, the Reserve Bank of India (RBI) did not raise interest rates in its bi-monthly monetary policy review for the second time this year.
This is expected to give some stability to the credit market, to boost capital expenditure and investments. The current rate hike cycle will help arrest inflation, and boost investment and consumption sentiment.
The lowering of the inflation projection signals a higher GDP growth and credit offtake, two key boosters for the markets.
RBI Governor Shaktikanta Das said “headline inflation still remains above the target and being within the tolerance band is not enough. Our goal is to achieve the target of 4.0 per cent going forward”.
This signals that RBI is uncomfortable with the 5 per cent-plus inflation in FY24. Also, it expects inflation to peak in Q3 of FY24, thus making the possibility of a rate cut in Q3 highly unlikely.
Analysts expect a cut in Q4 (Jan-Mar).
The RBI also left the policy stance unchanged in a 5-1 vote in the MPC, seeing that liquidity remains in surplus and the withdrawal of Rs 2000 notes will add to it. Thus, the RBI is focused on “withdrawal of accommodation”.
World
HIV alarm in Uganda as anti-gay law forces LGBT ‘lockdown’ (Page no. 21)
(GS Paper 3, Economy)
The HIV/AIDS treatment centre in Kampala is almost empty, days after Uganda enacted one of the most draconian anti-gay laws on Earth.
The usual daily influx of around 50 patients has all but dried up, say staff. Antiretroviral drugs pile up unused.
Andrew Tendo, resident medical officer at the US-funded clinic, warned that new waves of HIV infections were forming even as vulnerable people stayed away from treatment centres, afraid of being identified and arrested under the new laws.
The LGBT community in Uganda is on lockdown now. They don’t have preventive services. They cannot access condoms, they cannot access ARTs (antiretrovirals).”
Under the bill, which President Yoweri Museveni signed into law last week, gay sex is punishable by life in prison while “aggravated homosexuality” – which includes transmitting HIV – is punishable by death.
Until this year, the Kampala clinic had been a beacon of success for the fight against HIV in Uganda, where 1.4 million people live with the virus and 17,000 die a year as a result of its ravages, according to the state-run Uganda AIDS Commission.