RBI Injects Liquidity as Indian Markets Rebound: Top Stories for March 5, 2025
By the NDTV Profit Desk
March 5, 2025, 08:00 PM IST
In a day marked by significant developments in both domestic and international arenas, Indian financial markets exhibited a positive turnaround, with key indices like Nifty 50 breaking a 10-day losing streak. The Reserve Bank of India (RBI) announced measures to boost liquidity, while various sectors are navigating challenges ranging from production shortages to evolving taxation strategies. Here’s a closer look at the top stories illuminating the business landscape today.
RBI’s Liquidity Boost to Banking System
The Reserve Bank of India has stepped in to inject much-needed liquidity into the banking system by announcing fresh open market operation (OMO) purchase auctions and dollar-rupee buy/sell swaps. The central bank will conduct OMO purchases of government securities worth ₹1 lakh crore, split into two tranches of ₹50,000 crore each. The first auction is scheduled for March 12, followed by the second on March 18. In addition to the OMOs, the RBI is set to hold a notable dollar-rupee buy/sell swap auction worth $10 billion for a tenure of 36 months on March 24. This measure comes shortly after a successful $10 billion swap auction that received strong bids, indicating a robust appetite for liquidity amid ongoing financial adjustments.
Concerns Over Perpetual Credit Lines
The RBI has raised alarms regarding non-bank financial companies (NBFCs) that are offering perpetual credit lines, wherein borrowers have indefinite access to funds without fixed repayment schedules. The regulator’s concerns pivot on the risk of borrowers engaging in the ‘evergreening’ of loans; a situation where new credit is used to pay off existing debts, potentially leading to a spiral of unmanageable financial obligations.
Digital Personal Data Protection Regulations Finalized
On the regulatory front, the Indian government announced the completion of public consultations regarding the Digital Personal Data Protection regulations, with no further extensions available for comments. The finalized framework is expected to significantly shape how digital companies will handle data in compliance with legal obligations, as authorities seek to enhance data security and consumer protection.
Nifty 50 Breaks Losing Streak
On the equity front, Nifty 50 rebounded with a rise of 1.15%, closing at 22,337, while the broader Sensex index gained 1.01%, finishing at 73,730. This marks the end of the index’s longest losing streak in 29 years, offering a breath of fresh air to investors. All sectoral indices concluded in positive territory, led impressively by Nifty Metal and Nifty Media, reflecting a broad-based recovery.
China Sets Conservative Growth Target
Shifting our focus to international markets, China has set its GDP growth target at approximately 5% for 2025. This target reflects consistency as it remains unchanged for three consecutive years, underscoring a cautious approach amidst ongoing trade tensions with the United States. Additionally, the Chinese government has outlined a fiscal deficit target of approximately 4% of GDP, the highest observed in over three decades.
Tax Strategies for High Earners
In the realm of taxation, there has been an increasing trend among high-income individuals utilizing Section 80GGC of the Income Tax Act to claim deductions on donations made to political parties. Although this provision has been in place for several years within the old tax regime, it has become particularly popular as a tax-saving strategy. There are emerging intermediaries facilitating these transactions, with political parties reportedly returning up to 95% of the donation in cash, raising potential ethical concerns.
Looming Air Conditioner Shortages
In a potentially troubling forecast for consumers, India may experience air conditioner shortages by mid-April due to production delays in compressors and essential components. Leading manufacturers, including Voltas and Blue Star, have indicated that while they can manage a 25-30% rise in demand, a significant surge could result in stock shortages, particularly as the summer season approaches.
Proposed Tax Bill Expands Digital Oversight
Lastly, the proposed Income Tax Bill of 2025 could empower tax officials with access to private emails and social media accounts if there are suspicions regarding undisclosed income. The new rules, which could be implemented by April 1, 2026, include a clause allowing tax officials to override access codes to digital accounts, raising critical questions about privacy and surveillance.
Conclusion
In conclusion, today’s developments in Indian markets and regulatory measures reflect both challenges and opportunities for businesses and investors. From the RBI’s liquidity initiatives to evolving tax strategies and international growth targets, stakeholders are advised to stay informed and prepared for upcoming shifts in the economic landscape.
For more detailed insights into each story, stay tuned to Smart Money Mindset.
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