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Below the RBI policy reaction view from Ms . Palka Arora Chopra, Director, Master Capital Services

Though RBI raised some concerns on the inflation front due to uneven monsoon in some parts of the country which has led to an increase in vegetable prices. The committee expected that headline inflation will increase in the next couple of months which has led to RBI increasing the CPI inflation targets to 5.4% in FY24 vs an earlier projection of 5.1%.
On the economic front, RBI remains confident in recovery in rural demand led by strong fertilisers demand, tractor sales and high growth in agriculture credit. Industrial activity continued to perform well as evidenced by the IIP, manufacturing data.  
RBI remains committed to the withdrawal of accommodation going forward.
The decision of incremental CRR of 10% for banks is to absorb the excess liquidity from the system following the withdrawal of Rs 2000 currency notes. We expect it will not impact majorly to the banks in the longer tenure. The banking sector will continue to remain resilient on the back of strong asset quality, healthy credit growth and well capitalisation.

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