upcoming events of significance and impacts on the economy

1. Economic time table
Upcoming events of significance
and their impact on the economy

2. Introduction
• Indian economy is the seventh largest economy in the
world. The events like New RBI governor ,GST passage,
Monetary policy committee selection,
FCNR(B)redemptions,7th pay commission allowance are
upcoming events in the present year. This events helps
the economy to reach the highest position. The
significance and impacts of upcoming events in the
macro economy are described in this topic.

3. August
Event Macroeconomic effect
 New RBI governor o Neutral candidate is expected.
o Flexible inflation rate.
 GST passage Short term impact
o Temporarily reduce growth.
o Push up inflation.
o Affect state tax collection.
Medium term impact
o Unambiguously positive.

4. Candidates nominated for the next RBI
governor are:
oVijay Kalka
oRakesh Mohan
oAshok Lahiri
oUrjit Patel
oArundhati Bhattacharya
oSubir Gokarn
oAshok Chawla

5. GST
• Good Service Tax (GST) is a value added tax which will be levied on
both goods and services at both Centre and state level. One single
tax will be levied on the product and services which is being sold. In
effect multiple tax like central sales tax, state sales tax, CENVAT will
be replaced by GST.
• Tax rate of mobile phone and laptop will be increased from 3 to 4%.
• 8% decrement in the tax rate of vehicle.
• 3% increment in the cost of life insurance, health insurance ,vehicle
insurance.
• Tax rate of t v , refrigerator , a/c ,micro wave oven, washing machine
• Will be reduced.
• Tax rate of jewelery will be increased.

6. August/September
Event Macroeconomic effect
Monetary policy committee selection. Reduce the bias of external members.

7. Monetary policy
• The central bank formulates the monetary policy
of the country.
• The main objectives of the monetary policy are
price stability and economic growth.
• Measures taken by the monetary authority to
control supply of money is called monetary
policy.
• Monetary policy impacts the money supply in
an economy, which influences interest rates and
the inflation rate.

8. Monetary Policy Committee (MPC)
• The Monetary Policy Committee (MPC) is formed under the RBI with six
members.
• Three of the members are appointed by RBI while the other three members
are nominated by external selection committee.
• According to the Finance Bill, the committee will consist of the RBI
governor, a Deputy Governor in charge of monetary policy and one officer
of the central bank.
• The other three members will be appointed by the central government
through a search committee, . This search committee will comprise of the
cabinet secretary, the secretary of the Department of Economic Affairs, the
RBI governor and three experts in the field of economics or banking as
nominated by the central government.
• The members of the MPC appointed by the search committee shall hold
office for a period of four years and shall not be eligible for re-appointment,
said the government. They will take decision regarding interest rate and
inflation rate setting in future

9. September/November
Event Macroeconomic effect
 FCNR(B) redemption. o Deposit slow down.
o Higher liquidity cover ratio needed.
o Manageable transitory impact.
o Slight pressure on balance of
payment.

10. FCNR
• Foreign Currency Non Residential account
deposit(FCNR) is a fixed deposit foreign
currency account.
• The foreign currency non-resident bank account
FCNR (B) deposit redemption, which begins in
September 2016, is unlikely to be disruptive for
the bond and currency markets, according to
India Ratings and Research .

11. October/November
Event Macroeconomic effect
 7th pay commission allowance
increases.
o Push up CPI and fiscal deficit.

12. 7th pay commission allowance 2016
In Seventh Pay Commission bonanza, lakhs of central government
employees will soon receive higher salaries and arrears in one go. This
may result in an increase in the tax slab of many employees As they
will receive arrears from January 1, 2016. The government is expected
to settle for a higher fiscal deficit target of 3.8 per cent of GDP and 5
per cent CPI target by early next year.
• The minimum pay in government is recommended to be set at R s
18,000 per month.
• R s 2,25,000 per month for Apex Scale and R s 2,50,000 per month
for Cabinet Secretary and others presently at the same pay level.
• The increase in pay will be 16 per cent, increase in allowances will
be 63 per cent, and increase in pension would be 24 per cent. .

13. conclusion
The upcoming events like new RBI governor, GST passage
,monetary policy committee selection, FCNR(B) redemption,7th pay
commission allowance increase are described in this topic. This events
will make many possible changes in the macro economy. It may
positively or negatively affect the macro economy.

14. Thank you