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LIC Housing Finance increased its Prime Lending Rate by 50 basis points on Monday. With this the new interest rates on home loans will now start from 8 per cent as against 7.50 per cent earlier.

The new rates will be effective from Monday.

The move was inline with the central bank, which hiked repo rate by 50 basis points in the recent monetary policy to tame inflation that is hovering above the upper tolerance band for consecutive months.

"As expected, the RBI's decision to hike the repo rate by 50 basis points on 5th August was well measured and abreast with the global economic trend. The hike in repo rate has caused some minimum fluctuation in the EMIs or the tenure on the home loans but demand for housing will remain robust. Hence, the interest rate hike of LIC HFL is in line with the market scenario," said Y. Viswanatha Gowd, MD & CEO.

The Indian rupee's fair value is around 80 against the U.S. dollar, given the country's balance of payment challenges and the Reserve Bank of India's interventions, JPMorgan's head of emerging Asia local markets strategy said.

India's balance of payments, a measure of how much the country relies on money from abroad, has been squeezed by a record trade deficit that has prompted economists to revisit their current account deficit and balance of payments (BoP)projections.

"India's CAD (current account deficit) is tracking 4% of the GDP, historically a wide number. If left unchecked, this should reflect on the price of the rupee. But things are not left unchecked, and RBI has been managing the rupee," Arindam Sandilya told Reuters in an interview.

"Taking a holistic view on India's forex-relevant BoP position and the RBI, we reckon the fair value of the rupee is around 80."

India's foreign exchange reserves have declined to $570.7 billion from a record high of about $642 billion in September 2021 as the RBI has stepped in to bolster the rupee. Still, the local currency is down 7.5% in 2022, and on track for its worst annual performance in four years.

The rupee was trading at 79.85 per U.S. dollar on Monday, within a whisker of the record low of 80.0650 reached last month.

A rebound in inflows into Indian stocks in the past few days, with foreign investors turning buyers for the first time in nine months, has helped the rupee to an extent.

Sandilya reckons that JPMorgan's fair value was near 81-82 at the beginning of the current quarter, but the surprising turnaround in equity flows has led it to reassess its fair value to near 80.

He said that rupee's valuations remained "a little rich" relative other emerging market (EM) currencies and short rupee positions had potentially "have more runway".

Shandilya pointed out that the market's pricing of the U.S. Federal Reserve's slightly dovish path next year is contrary to what policymakers have been saying recently.

On how much the oil's recent pullback will help rupee, Sandilya pointed that when there is a demand-side fuelled drop in oil prices, emerging market currencies, including that of oil importing nations, weaken.

Imagine being a judge who is tasked with delivering a verdict in a case involving sexual harassment. Let’s say, a case of groping by a boss. The alleged offence has happened in private, and by its very nature, in the absence of eye-witnesses. There is no physical scar that the judge can at least hark back to substantiate the allegation. So, as far as the judge is concerned, it is just the accuser’s word against the accused.

While we say that we should believe all victims, almost everybody will agree that justice delivery should be on a higher footing than that. Then there are the consequences of a judgment to reckon with. Sexual offences carry typically harsher sentences. It is easy for keyboard warriors to outrage that a judge has pronounced in a certain way — but the judge has to bear a tremendous weight of conscience in cases where there is no tangible evidence to go by (as opposed to a case like murder, or fraud, where there is a body, or some proceeds of crime, to base a judgment on). Perhaps this is the reason why so often, we are left wondering why even women judges often give the benefit of the doubt to the accused in cases where the evidence is scant.

To be sure, it is not that the Indian judiciary does not convict based on the uncorroborated testimony of a complainant in cases of sexual offences — even if the complaint was made with extreme delay. It does. But in these cases, the circumstances around the alleged offence, and how convincing the witness sounds, become important.

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If this is how a judge reasons through a conviction (assuming the judgment is a product of thorough reasoning), imagine how much more difficult it would be to decide on grant of bail. In last week’s controversial judgment, where a Sessions Judge in Kerala granted bail to accused in sexual assault cases, it might be useful to consider the scenario in which the judge did not give the reasons he did (that is, that the complainant was wearing provocative clothing, or in another case where he felt that the accused being a disabled caste activist, could not harass a Scheduled Caste woman).

What we have then is a case of groping, in layman’s language. The offences are punishable with sentences of up to three years (Section 354, if it is established, carries sentence of between one and five years), which in normal circumstances, would afford an accused a reasonable chance of bail. To argue that in sexual offences bail must not be granted, irrespective of these factors, is no different from the government legislating that in cases involving a threat to national security (under UAPA, for instance) bail should not be granted until innocence is proven. As Supreme Court Justice Sanjay Kishan Kaul said recently, bail cannot be denied merely because it is perceived that ultimate conviction is uncertain and might take far too long.

Meanwhile, in England, a Premier League footballer who is accused of rape is still playing football (presumably, as his identity cannot be revealed) because of the protections afforded under English law.

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Pronouncements in cases involving sexual offences have yielded to controversy more often than not in recent times — for good reason. ‘Provocative clothing’ or ‘[scroll.in/latest/1010860/skin-to-skin-judgement-sc-quashes-bombay-hc-ruling-says-sexual-intent-most-important-ingredient]skin-to-skin touch’ were absolutely irrelevant considerations to the matters at hand. It is not for want of guidance. Last year, the Supreme Court laid down detailed guidelines for courts to follow in sexual offence cases. These include that “discussion about the dress, behaviour, or past “conduct” or “morals” of the prosecutrix, should not enter the verdict granting bail”.

This judgment concludes saying that “Judges play – at all levels – a vital role as teachers and thought leaders. It is their role to be impartial in words and action, at all times. If they falter, especially in gender-related crimes, they imperil fairness and inflict great cruelty in the casual blindness to the despair of the survivors”.

So it is not that judges don’t have bright-lines they are forbidden from crossing. But moralistic notions are perhaps imprinted so deeply that mere diktats of law, or common sense, pale. Remember, these attitudes affect not only cases involving sexual offences. The Supreme Court judgment calls for the National Judicial Academy to speedily devise inputs for judges’ training so as to avoid stereotyping and unconscious biases that can creep into judicial reasoning.

However, it is foolish to assume that these values will be adopted by the judicial hierarchy smoothly. A society that is deeply patriarchal should not expect its judges to be suddenly egalitarian. In fact, the more the outrage machinery reduces issues of gender justice to black and white boxes of woke sensitivities, judges will feel obliged to take a conservative view to ensure they are not being misled.

When the Reserve Bank of India adopted a formal retail inflation target and turned into an inflation-targeting central bank just like its developed economy peers, little did it anticipate a potential failure only six years into the job. To be fair, pretty much every inflation-targeting central bank globally is staring at an embarrassing failure this year and some have even tasted it already.

The RBI is mandated by law to keep retail inflation in a 2-6 percent band and it will fail to do so if retail inflation averages above 6 percent for three consecutive quarters. The odds of this happening are high after the inflation print of 6.7 percent for July.

Most private economists have pegged their forecasts at around that of the RBI or slightly below. But none expects Consumer Price Index inflation to slip below the 6 percent mark.

FY24 could be a lot more forgiving on the inflation front as the base effect itself could bring down progressive readings. Economists expect average inflation to be about 5 percent for the next year.

While that would bring inflation within the mandated band, in spirit the RBI would consider a win only when the coveted 4 percent medium-term target is reached. Economists expect it will take another six quarters at least for headline retail inflation to drop to 4 percent.

Global commodity inflation would continue to weigh heavily but fiscal policy, and the strength and unevenness of economic recovery would be determinants of inflation as well, making the journey to 4 percent arduous for the RBI.

Push becomes shove

Some factors that have capped the surge in inflation are from the fiscal side. Whether it was the restriction of imports of important food grains or a cut in taxes on fuel, the government has done its bit to keep retail prices from rising unbridled in the wake of the global surge in them.

Rahul Bajoria, chief India economist at Barclays, pointed out that a lot of what the RBI can do depends on how much the government reverses its fiscal policy measures.

“There are a lot of fiscal tools at play in managing inflation. Some of these tools may have to be reversed,” he said.

The government plans to bring most goods under the ambit of the goods and services tax. GST has been increased for several items, which may feed into inflation as manufacturers hike market prices to absorb the tax impact. Then there is the government’s fiscal deficit itself, which needs to be brought down.

Bad side of good news

India’s economic recovery has gained traction, in a relief to policymakers. Under the pleasing recovery is weak consumption demand, which prevents demand-led inflation.

However, this has to be seen through the lens of pricing power. Companies have been able to increase prices and prevent a sharp erosion of their profit margins despite weak consumption demand.

The uneven K-shaped economic recovery has meant that large listed manufacturers dominate the pricing decisions of items while the universe of small businesses buckles under pressure.

“The companies that are big and dominate industry also supply much of the consumption goods and services while a large part of small business are involved as suppliers to big companies. So a few large companies determine the pricing of goods and they can easily hike prices,” said an economist at foreign bank, requesting anonymity.

The upshot is that even if consumption demand isn’t as robust as it was before the pandemic, there is no guarantee that prices will come down. Eventually, demand for higher wages will feed into inflation.

That brings us to inflation expectations, something the RBI must monitor at all times. Household inflation expectations have cooled off in recent months, but they remain elevated. Confidence that prices may come down is shaky yet. Until expectations show a sustained drop, the outlook on retail inflation is likely to remain clouded.