There is still a week of the general election; the Indian central bank sent Modi “re-elected assists.”

In the monetary policy that is generally tightening in emerging market countries, the Bank of India cut the second wave of interest during the year (April 4) following the sudden rate cut on February 7. Just yesterday, the Indian stock market hit a record high, rising 7.7% in March, outperforming all other markets in the world, the most significant monthly increase in nearly three years.

At this time, only one week left from the Indian election, the newly appointed Indian central bank governor also led Modi’s “waste money movement”. The US media believes that the Bank of India’s move is to assist in Modi’s re-election.

The Former President Insisted On Not Cutting Interest Rates, And The New President Took The Stage To Drop 2

Since August last year, the Indian stock market has experienced a decade of “bull market” and has been affected by the shock of the domestic financial industry. The Indian rupee had also become the worst performing currency in Asia last year.

central bank

India’s central bank

Last year’s rupee’s exchange rate against the US dollar

The Indian Express pointed out that to help non-bank institutions tide over the difficulties, the Indian government has repeatedly asked India’s central bank to relax restrictions since September. “Quartz” revealed that on November 19 last year, the Bank of India and the government conducted a nine-hour “confrontation”, and the former said that they would not cut interest rates.

On December 10 last year, the former Governor of the Bank of India, Urjit Patel, suddenly announced his resignation for “personal reasons”, sparking concerns about the future “independence” of the Indian central bank. The next day, Shaktikanta Das, a member of the Indian Finance Committee, who led Modi’s “waste money movement”, “takes the stick”.

Dastu from India Express

After the “traditional civil servant” who was not an economist came to power, he announced a rate cut in February this year and lowered the interest rate by 25 basis points to 6.25%. Today (April 4), the Bank of India again cut interest rates from 6.25% to 6%.

On the market side, the Indian stock market has regrouped. The Indian stock market rose 7.7% in March, ranking first in the world, the most substantial monthly increase in nearly three years. On April 3, India’s Mumbai Sensitive Index recorded 39,270.17 points in intraday trading, setting a record for the broader market. However, after the Indian central bank announced a rate hike today, the Indian Mumbai Sensitive Index closed down 0.49% to 38,684.72.

The Indian rupee continued to strengthen with the stock market’s rise. The US dollar against the rupee exchange rate fell 0.7% to 68.43 yesterday, the lowest level since August 2018.

  There Is No Doubt That The Bank Of India Has Received Pressure From The Government”

On the other hand, according to the Wall Street Journal reported on April 2, in the first quarter of this year, 8.4 billion U.S. dollars of foreign capital flowed into the Indian stock market, a record high in the past five years; among them, it flowed into 4.3 billion U.S. dollars in March, within 2 years. Maximum single month net inflow.

The article quoted analysts as saying that “investors are now more and more confident about Modi”, and foreign capital is betting on the latter’s re-election.


Bloomberg believes that the two interest rate cuts by the Bank of India have helped Modi’s reelection campaign. The Indian central bank was also exposed to plans to transfer more central bank assets to the Indian government, thereby easing India’s growing budget deficit and allowing Modi to commit more budgetary spending to its ticket warehouse area.

Reuters Data

According to Reuters data, India’s budget deficit from April 2018 to February this year was $123.07 billion.

As far as elections are concerned, Modi’s ruling coalition led by the People’s Party does have an advantage. According to the Indian Economic Times, the survey of 50,000 voters by CVoter, a national polling agency, revealed that the ruling coalition could at least take 241 seats, a majority of 272 votes, in a survey of 50,000 voters in mid-March. Not far away, the ruling party alliance led by the Congress Party has only 141 seats.

“There is no doubt that the Bank of India has received pressure from the government,” CBN quoted Prakash Sakpal, an ING Asian economist at the Dutch International Group, as saying, “But at the point of time only one week away from the election. It’s hard to imagine that this decision would miraculously boost the Indian economy.”

Vishnu Varathan, head of economic strategy research at Mizuho Bank, is cautious about India’s interest rate cuts: “The fall in the wrong situation will lead to the devaluation of the rupee and macroeconomic instability.”