Loan EmiImage Credit source: File Photo
Government figures regarding inflation have given common people a chance to be happy. The government and the RBI are not backing down from patting themselves on the back. Still many questions remain in front. Because of which this happiness can last only for some time for the common people. In fact, many such situations can arise in the country which can increase the inflation again, due to which RBI can be forced to increase the EMI again. Yes, the biggest reason is El-Nino. The discussions about which are very hot.
There are also chances of drought in many parts of the country. On the other hand, there is no good news regarding monsoon either. In such a situation, agricultural production may decrease in the country. Apart from this, the economic crisis in America and Europe. Because of which the pressure on central banks to increase interest rates may increase there. Let us try to understand the reasons due to which inflation in the country and then EMI can increase both.
El Nino can be a big crisis for the country
According to experts, between June and September, the possibilities of El Nino have increased up to 90 percent. Due to which the rainfall in the country may decrease. If the rains are less then the pattern of drought can be seen in the parts of the country and the chances of destruction of crops in the country will increase. If this happens, the prices of food items will increase in the country. The effect of which will be that RBI will have to increase the policy rate and the common people will see an increase in EMI. Even before this, due to El Nino, patterns of less rain have been seen. The effect of which has been clearly seen on the country’s economy as well.
Weak monsoon expected
On the other hand, the forecast made by the Meteorological Department regarding the monsoon is really troubling. This time the entry in the country may be delayed. According to the department, this year the monsoon will enter the country on June 4. While its date is June 1. The department believes that there may be normal rainfall in the first part of the monsoon and less than normal in the second part. Because of which agriculture can be seen weak in the country. Apart from this, this time the temperature in the country can be 3 to 4 degrees higher. Due to a slightly weaker monsoon than normal and increasing heat, the chances of damage to the crops will increase.
Central bank can increase interest again
The US Fed had increased interest rates in the month of May, which was 0.25 percent. Whereas in the US, it was expected that the interest rates would not increase amid rising inflation. After that European Central Bank and Australian Central Bank have also increased. If experts are to be believed, then the interest rates of American banks can be seen to increase again. Inflation in the country has not yet come down to the level it should have been. Europe is already facing the brunt of inflation. Due to which interest rates can be seen to increase again.
What is RBI’s estimate regarding inflation?
In the month of April, the country’s retail inflation is at the lowest level of 18 months and wholesale inflation has reached the lowest level of 3 years. Because of which the MPC interest rates can be kept stable again in June. By the way, in the April meeting, the RBI may remain 5.2 percent in the current financial year and this figure may remain 5.1 percent in the current quarter. By the way, RBI has increased the interest rates for six consecutive times, the policy rate has been increased by 2.50 percent and the repo rate has come down to 6.50 percent.
What do the experts say?
According to Tanvi Gupta Jain, Economist of UBS India, however, it is expected that RBI may keep its rates on hold in the June meeting. He said that there is a risk of increase in inflation due to the possible El Nino of the country. Apart from this, the interest rates of the US Fed can also bother the common people. India Meteorological Department (IMD) said that El Nino may affect the second phase of monsoon in July. Because of which there can be an increase in the country.