Employment intensive sectors such as agriculture, housing, tourism, textiles and retail must flourish and grow, writes a policy expert.

Narendra Modi is known as a transformational leader of exceptional inner strength and courage, and with his announcement a few weeks ago to change high denomination currency notes, he donned an unexpectedly breathtaking challenge on himself and invited every citizen of India to completely and totally metamorphose our economy and society.

The questions on everybody’s lips are: When will the RBI cut rates? And when will banks pass on RBI’s previous rate cuts to customers?

The logic behind those questions is evident. The short-term economic forecasts are not very encouraging. The Reserve Bank of India (RBI) expects the country’s GDP to grow at 7.1 per cent in 2016-17, a sharp half percentage point lower than its previous growth estimate of 7.6 per cent.

RBI Governor Urjit Patel may be able to cut rates but only later this year. We take a look at what this would mean for the Indian economy.

When will Reserve Bank of India (RBI) Governor Urjit Patel cut interest rates? Speak to analyst, economist or businessman; that will be among his top two or three concerns.

The background

The central bank dashed hopes for a rate cut in December when the six-member Monetary Policy Committee (MPC), which sets rates, decided to retain the repo rate, the rate at which the RBI lends to banks and the key rate that banks use as a benchmark for the lending and deposit rates, unchanged at 6.25 per cent.

The apex bank adopted this hawkish stance despite retaining its March-end retail inflation projection at 5 per cent. It, however, cautioned that high oil prices and rising interest rates abroad could once again fan inflation.

A policy expert analyses if India’s current rate of growth is any cause for worry or a sign of sustainable recovery.

India increasingly attracts positive attention from foreign sources. This is evident when one meets with groups of foreign investors who see India as an attractive investment opportunity. This renewed investor interest in itself is not surprising given the rather uncertain and downbeat conditions in a large number of advanced and emerging economies.

Nirmala Sitharaman, India’s commerce minister, maintains a punishing 14-15 hour daily work schedule. Over the last two years, she has been in the thick of the action and has earned a reputation for being a tough task master and a committed reformer.

She spoke exclusively to India Inc.’s Consulting Editor Arnab Mitra and discussed a wide range of economic issues in this exclusive interview.

The Narendra Modi government firmly underlined its reformist credentials and signalled unequivocally to foreign investors that it is serious about economic liberalisation by opening up or easing foreign direct investment (FDI) norms for nine sectors including defence, pharmaceuticals, food processing, single brand retail and aviation.

“Today’s FDI reforms will give a boost to employment, job creation & benefit the economy,” Modi said on Twitter shortly after the announcement of the new FDI norms.

The Indian Prime Minister, who invoked his special powers to approve the guidelines, added that these will also improve the ease of doing business. “India now the most open economy in the world for FDI; most sectors under automatic approval route,” he said.

Reiterating that the latest round of reforms will boost the country’s growth rate…

Now that Brexit is done, dusted and fading from the front pages of Indian newspapers, it is time to return to a question that has more immediacy in the domestic context: What after Rexit?

The shrill reactions have subsided. Knee jerk reactions like “After Rexit, ruin,” have, fortunately, proved premature and alarmist. Rexit, of course, borrowing a reference from Brexit or Britain’s exit from the European Union (EU) to reflect Raghuram Rajan’s impending exit as Reserve Bank of India (RBI) governor. Now that the dust is beginning to settle over Rajan’s surprise announcement that he will be returning to academia at the end of his term as India’s central banker, it is a good time for a reality check on how his decision will impact the Indian economy.

The shrill reactions have subsided. Knee-jerk comments like “After Rexit, ruin,” have, fortunately, proved premature and alarmist. Now that the dust is beginning to settle over Reserve Bank of India (RBI) governor Raghuram Rajan’s surprise announcement that he will be returning to academia at the end of his term as India’s central banker, it is a good time for a reality check on how his decision will impact the Indian economy.