 |
|
CRR up by 25 basis points,
key rates stay Mumbai, April 29 It also announced that the repo rate and reverse repo rate will remain unchanged at 7.75 per cent and 6 per cent, respectively. The bank rate will also be held steady at 6 per cent. Releasing the Annual Policy Statement for 2008-09, RBI Governor Y.V. Reddy said high priority was being given to price stability, anchoring inflation expectations and orderly conditions in financial markets while efforts were being made to sustain the growth momentum. Dr Reddy said the RBI aimed to bring down inflation to around 5.5 per cent in 2008-09, with a target of 5 per cent as early as possible. Today's CRR hike would suck out over Rs 9,000 crore excess funds from the banking system, while the 0.5 per cent increase in CRR announced on April 17 was aimed at squeezing out Rs 18,500 crore from the system. Going forward, the resolve is to condition policy and perceptions for inflation in the range of 4-4.5 per cent, so that an inflation rate of around 3 per cent becomes a medium-term objective, Dr Reddy said. He added that the central bank has projected GDP growth for 2008-09 in the range of 8-8.5 per cent. The RBI noted that the country’s economic activity continues to be driven by domestic demand. “The pick-up in inflation during the fourth quarter of 2007-08 has mainly emanated from supply-side pressures such as the one-off increase in domestic petrol and diesel prices to partially offset the global crude oil price increase over the year; continuous hardening of prices of petroleum products that are not administered, rising prices of wheat and oilseeds and the adjustment in steel prices in March 2008 due to the surge in international prices,” RBI said. The apex bank noted that demand pressures, which have been reasonably contained so far, are being coupled with supply-side factors which, if not temporary, could impact domestic inflation significantly. Regarding the global scenario, the RBI noted that growth forecasts for emerging market economies (EMEs) have been moderated in the face of the financial turbulence and the anticipated slowdown in the US economy. “A key risk to the outlook for EMEs is rising food, energy and commodity prices that are already imparting inflationary pressures and raising concerns about impacting the momentum of growth in these economies,” RBI said. Dr Reddy also noted that the recent monetary policy responses in the US have also heightened the uncertainties facing EMEs by widening interest rate differentials and increasing the costs of sterilisation, especially in a period when inflationary pressures warrant tightening. The RBI said the outlook for the global financial system is overcast by the rising incidence of losses and write-offs in banking systems in the US and Europe amidst dislocations in the securitised credit market. There are also growing uncertainties surrounding the viability of financial guarantors and doubts about their business models as well as the approach of rating agencies with potential systemic implications. The apex bank noted that on the domestic front, the outlook remained positive up to January 2008. “Since then, the prospects for growth in the year ahead have been trimmed as risks to inflation and inflation expectations from the upside pressures due to international food, crude and metal prices have become more potent and real than before,” RBI said. Highlights
*CRR up by 0.25 pc to 8.25 pc with effect from May 24 *Repo, reverse repo, bank rate unchanged *Repo rate at 7.75 pc, reverse repo and bank rate at 6 pc *GDP growth for 2008-09 to be in range of 8-8.5 pc *Inflation to be brought down to 5.5 pc in 2008-09 *Medium term objective for inflation around 3 pc *Deposits projected to increase by around 17 per cent or Rs 5,50,000 crore during 2008-09 *Adjusted non-food credit projected to increase by around 20 per cent during the year. *Introduction of STRIPS in government securities by the end of 2008-09. *A clearing and settlement arrangement for OTC rupee derivatives proposed *Oil refining companies allowed to hedge price risk in overseas markets on domestic purchase of crude oil and sale of petroleum products based on underlying contract *Currency futures to be introduced in consultation with the SEBI; broad framework to be finalised by May *Indian companies to be allowed to invest overseas in energy and natural resources sectors *RRBs allowed to sell loan assets to other banks in excess of their prescribed priority sector exposure *RBI to disseminate details of various charges levied by banks *Asset classification norms for credit to infrastructure projects relaxed *Prudential guidelines for specific off-balance sheet exposures of banks to be reviewed *Limit of bank loans to individuals for housing having lower risk weight of 50 per cent enhanced from Rs 20 lakh to Rs 30 lakh *Consolidated supervision of financial conglomerates proposed *Working Group to be set up for supervisory framework for SPVs/Trusts *Inter-departmental Group to review existing regulatory and supervisory framework for overseas operations of Indian banks *All transactions of Rs 1 crore and above made mandatory to be routed through the electronic payment mechanism
Govt revises duties on steel, cement New Delhi, April 29 The government also imposed export duty on semi-finished steel products and basmati rice to augment their domestic supply and discourage exports, besides abolishing countervailing duty on TMT bars used in construction, thereby making them cheaper. While rolling out UPA’s inflation-management plans in the Lok Sabha today, union finance minister P. Chidambaram dismissed fears of food crisis in India, though such fears were real for some countries in the world. “Food situation at home is improving with every passing day. Production of rice and wheat has set an all-time record at 95.68
metric tonne and 76.32 metric tonne, respectively,” the finance minister told the House. He complimented Punjab and Haryana for exceptional support in wheat procurement and Andhra Pradesh, Orissa and Chattisgarh for boosting rice procurement. As on April 28 this year, domestic wheat procurement was 134 lakh tonne as against 76.32 lakh tonne last year. The government today said it will procure more wheat than the target of 150 lakh tonne this year. Referring to global wheat prices, Chidambaram said they were showing a decline but rice prices were still ‘sticky’. Rice procurement this year has been 229 lakh tonne as against 209 lakh tonne last year; the procurement is expected to touch 270 lakh tonne, said the finance minister, listing other fiscal measures to tame prices. Steel, he said, accounted for 21.3 per cent of the current inflation; hence the reduction in basic customs duty on pig iron, ingots, semi-finished HR and CR coils, bars and rods and angles from 5 per cent to nil. He was replying to discussions on the Finance Bill, later passed amid a walkout by the Left parties. They were vexed at the government having ignored their recommendations on price control. For its part, the government levied export duty on different categories of intermediate and finished steel products to boost supply - 15 per cent on specific primary forms of steel, 10 per cent on rolled products and cold-rolled pipes and 5 per cent on galvanised steel. Basmati export has been made prohibitive, with Rs 8,000 to be charged as export duty and minimum export price fixed at $1,000 a tonne. “Margins of basmati exporters are huge; hence the export duty,” he said, announcing reduction in basic customs duty on butter oil from 40 to 30 per cent. Skimmed milk powder will also be cheaper, with customs duty down from 15 per cent to 5 per cent. “This is to ensure adequate milk supply in summer months,” he said. He also announced extension of duty exemption, currently available on environment-friendly electric cars, to battery-operated two and three-wheelers as well. Replaceable kits used in water filters will be granted full duty exemption to encourage availability of clean drinking water, while excise duty on cement will be charged at 12 per cent of the retail price instead of Rs 600 a tonne on cement bags that cost less than Rs 250.
|
|||||||||||||||||||||||||||||
|
|
| HOME PAGE | |
Punjab | Haryana | Jammu & Kashmir |
Himachal Pradesh | Regional Briefs |
Nation | Opinions | | Business | Sports | World | Letters | Chandigarh | Ludhiana | Delhi | | Calendar | Weather | Archive | Subscribe | Suggestion | E-mail | |
