RBI MPC TO MEET SIX TIMES IN THE NEXT FISCAL

The RBI will release its six-monthly Monetary Policy Report next week along with the MPC's
resolution. The Reserve Bank of India (RBI) Governor-headed rate setting panel will be holding its
first meeting of the next fiscal from April 6-8. According to the schedule released by the RBI on
Wednesday, the first bi-monthly monetary policy of is scheduled for April 6-8, and next will be held
during June 6-8. The third, fourth and fifth meetings have been scheduled for August 2-4, September
28-30, and December 5-7, during FY 2022-23. The MPC announces the bi-monthly monetary policy
after deliberations on the prevailing domestic and economic situations. The Monetary Policy Report
will be keenly eyed for the central bank's inflation forecasts and the assumptions
underpinning them. With global crude oil prices skyrocketing in the wake of Russia's invasion of
Ukraine, all eyes will be on the price of India's crude oil basket the RBI assumes in its models while
arriving at its inflation forecast.

Even as the Russia-Ukraine conflict brings risks of higher imported inflation and slower growth, the
Reserve Bank of India kept its monetary policy stance and interest rates unchanged, in the prior
meet that was held.  ICRA said it expects the monetary policy stance to be changed to neutral in
June 2022, accompanied by a hike in the reverse repo rate, narrowing the corridor. “Subsequently,
we expect a shallow rate hike cycle, with two repo hikes of 25 bps each in August-September 2022,”
ICRA added. The most recent edition of the Monetary Policy Report, released in October
2021, revealed the central bank assumed a price of $75 per barrel for the second half of FY22.
However, the average price of India's crude oil basket was $83 a barrel in October 2021-February
2022.

The RBI's current forecast says headline retail inflation will average 5.7 percent in January-March
2022, 4.9 percent in April-June 2022, 5.0 percent in July-September 2022, 4.0 percent in October-
December 2022, and 4.2 percent in January-March 2023. For FY23 as a whole, Consumer Price Index
inflation is seen at 4.5 percent, as per the RBI. However, economists think this is a huge
underestimate and will likely be revised sharply upwards next week.

BONANZA FOR RELIANCE AND ONGC WITH LINGERING FUEL INFLATION

The government on Thursday more than doubled the price of natural gas that is used to produce
electricity, make fertilisers, turned into CNG and piped to household kitchens for cooking, on the
back of a spike in global energy prices.
The price of gas produced from old regulated fields, such as the nation’s largest gas field of Bassein
of ONGC, will rise to a record high of USD 6.10 per million British thermal unit (MMBtu) from the
current USD 2.90 per MMBtu, according to the oil ministry’s Petroleum Planning and Analysis Cell
(PPAC). On account of this, the Reliance Industries is set to get a record price of around USD 10 per
MMBtu for the KG gas, while state-owned ONGC is likely to while state-owned ONGC is likely to
fetch more than double the rate for its Mumbai High and other fields; in a bonanza of gas producers,
as stated by some sources.

The government sets the price of gas every six months -- on April 1 and October 1 -- each year based
on rates prevalent in gas developed nations. Prashant Vasisht, Vice President and Co-Head,
Corporate Ratings, ICRA Ltd, said: “The domestic gas price increase was driven by the significant run
up in the prices of gas at global gas hubs. The increase in gas prices provides relief to Indian
upstream producers as at earlier prices, gas production was a loss-making proposition for most fields
for the Indian upstream producers.” CNG and piped cooking gas supplies in cities come from the gas
produced by ONGC. For difficult fields like discoveries in deepwater, ultra-deepwater and high
pressure-high temperature areas, a slightly modified pricing formula for configuring the domestic
rates is used by incorporating the price of LNG, which too had shot through the roof in 2021.

Reliance-bp operated KG fields are classified as difficult fields. Such field operators are allowed to
discover market price but this is subject to cap fixed for the difficult fields twice every year.