RBI announces 50 bps Rate Cut; FM welcomes

The Union Finance Minister Shri Arun Jaitley said that the Government welcomes the Reserve Bank of India (RBI)’s decision to reduce the repo rate to 6.75 percent from 7.25 percent. The Finance Minister was responding to the Monetary Policy announcement made by the Reserve Bank of India today.

The Finance Minister said that constant vigilance is warranted on the inflation front, this action signals that inflationary pressures have moderated significantly and are within the RBI’s comfort zone. He said that the Government is committed to meet its fiscal deficit target to consolidate the gains achieved in reducing the inflation.

The Finance Minister Shri Jaitley further said that this action also signals that the RBI is able to provide policy support to the real economy and help its recovery. He said that the Government looks forward to the transmission of these cuts to the rest of the economy and will work to facilitate this transmission, including by reviewing the framework of small savings. Shri Jaitley said that the rate cut, combined with actions taken and planned by the Government, will help boost confidence and investment, and help realize the economy’s medium-term potential growth rate.

The Finance Minister Shri Jaitley further said that Indian corporates would now be able to raise External Commercial Borrowings (ECB) through rupee denominated offshore bonds with no end use restrictions. He concluded that this would provide additional source of raising resources which would be fully hedged as they are denominated in rupees.

Shri Shaktikanta Das, Secretary, Department of Economic Affairs (DEA), Ministry of Finance said that the Medium Term Framework for FPI investment in Government Securities would bring in predictability for foreign investors. He said that the limits would be increased from existing 3.8% to 5% of the outstanding stock of Government Securities by March 2018 implying increase by about Rs 1,20,000 crore from the existing limit of Rs 1,53,500 crore.

Shri Das said that in the current financial year, Rs.26,000crore would flow in the Government Securities. He said that the increase in FPI limits would bring in greater foreign participation with predictability and would result in higher liquidity in the Indian Government Securities market. He said that for State Development Loans, FPI limits have been fixed for the first time at 2% of the outstanding stock that would amount to about Rs 50,000 crore by March 2018 and Rs.7,000 crore would flow in State Government Securities during the Current Financial Year. This would bring higher liquidity in these State Government bonds.

The Chief Economic Adviser Dr Arvind Subramanian said that the transmission of rate cut is partly by the banks and partly by the market rates coming down. He reiterated that the Government looks forward to the transmission of these cuts to the rest of the economy and will work to facilitate this transmission, including by reviewing the framework of small savings. He said that the Government would review the GDP rate target for the current Financial year after the figures of second quarter are available.

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Inflation dips below 5%

The headline inflation plunged below 5 % in April 2013. According to government data released on Tuesday, the wholesale price index (WPI)-based inflation was recorded at 4.89 per cent in April. The inflation was at 5.69 per cent in the month of March.

The inflation is below five per cent, for the first time the figures were seen below five after November 2009. The moderation in the inflation could prompt the apex bank to cut further key interest rates.

In economics, inflation is referred to rising prices and fall in the value of money (in exchange).

Recently, the Reserve Bank of India had cut the key interest rates following moderation in the inflation. A further cut would help the stock markets to gain more confidence.

The equity market in India has been seen strong as the BSE Sensex was zoomed to the highest of 20,000 mark, after many choppy sessions.

The inflow of the fund into the stock market by the foreign institutional investors (FIIs) was high in the first week of the May 2013. For the same period, the FIIs had poured Rs. 26,000 crore rupees into the Indian equity market.

The easing inflation could be a bit of relief for the consumers as they witnessed a moderate cut in the petrol price by the government of India.

Considering all the above cases, it could be projected the Indian economy has been on the track gain from the economic slowdown.

However, some negative forces like the uncertain political activities, border tension with China, devaluation of rupees in the international forex market and low industrial growth rate could pose threat to Indian economy and may derail it from the path of recovery.

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Inflation falls to 6.62% in January

The headline inflation dipped to three year’s low of 6.62 per cent in January 2013 from 7.18 per cent in December 2012. The inflation was at 7.24 per cent in November 2012.

Considering the moderation in inflation in December 2012, the RBI had slashed the key interest rates recently.

The fall in inflation would lead to further cut in interest rates by the apex bank if it finds time conducing for further cut in key interest rates to boost the economy.

However, the hike in the petrol and diesel deregulation would have adverse impact on the inflation in India. The food inflation in primary articles was increase during the same period, onion at 11.52 per cent and potato at 79.07 per cent.

The easing inflation data could not help the market to close in green; both the stock markets were ended in red on Thursday. The BSE Sensex was closed at 19,497.18 losing 110.90 points or 0.57%.

The Nifty was closed at 5,896.95 points shedding 36points or 0.61%.

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Headline Inflation dips in December 2012

The headline inflation dropped to 7.18 per cent in December 2012 from 7.24 per cent in November.

There are speculations of cut in the interest rates by the Reserve Bank of India, which will review its credit policy on January 29th.

The repo rate has been remaining at 8 per cent since April 2011, due to the high inflation rate in India. The cut in the repo rate could help the economy to recover from the slowdown.

The moderation in the price of fuel and manufactured goods were the major causes those helped to keep the inflation to three years lowest figures.

However, the possible reduction in diesel subsidies and hike in the railway fairs could up the inflation figures for the month of January 2013.

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RBI may cut interest rates: Goldman Sachs

Goldman Sachs expects that Reserve Bank of India may cut the interest rate on Tuesday while reviews its policy, according to media reports.

The data over inflation for the November 2012 shows slide in the headline inflation.

It is believed that any cut in the interest rate would boost the stock markets in the India. The rate cuts would have positive impact on the liquidity in the country.

There has been also slow growth rate of GDP at 5.3 per cent in July- September. And the core inflation was at 4.5 per cent.

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Inflation mounts to 7.23% in April

The headline inflation in April 2012 accelerated to 7.23 per cent from 6.89 in March due to costly food and manufactured goods. High inflation in Indian economy would have high impact on all the sectors, which may force the apex bank to bring some changes in the interest rates.

The falling value of money against US dollar is another major concern for Indian economy, which not only making the imports more costlier but also pushing the inflation up.

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RBI cuts Repo-Rate by 50bps

Business News: The Reserve Bank of India has cut the repo-rate by 50 basis points on Tuesday for the first time in last three years. The impact of the cut in favor of the people as they will pay less for the home, auto and corporate loans.

The apex bank cut the repo-rate to boost the economy and support the liquidity in the market. The soaring inflation has been the major issue for the economy which touched double digit.

The cut in the repo-rates or the key interest rates, the loans will be cheaper and that will boost the liquidity in the market. Companies like auto, realty have been speculation a good response following the recent cut in the repo-rate by the RBI.

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Food Inflation drops to 4.35%

Business News: The food inflation for the week ended on December 3 dropped to 4.35 per cent giving big relief to the government and Reserve Bank of India. The inflation and food inflation have been the major concern for the government, and the food inflation in India dropped to 4 year low.

In February, 2008 the lowest food inflation was recorded at 4.8 per cent on 23rd of the same month. The fall in the food inflation will give relief to household budget too, as they will pay less for the essential goods and services in the market. As per the WPI data, the price of vegetables dropped by around 12 per cent. 

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Annual food inflation mounts to 11.43%

The annual food inflation in India rose to 11.43 per cent on weed ended on October 15 comparing to 10.60 per cent recorded in the previous week. The fuel inflation was recorded at 14.70 percent for the same period; however it was at 15.71 per cent in the previous week.

According to a data released by the government of India on Thursday, the food inflation mounted to 11.43 per cent and the double digit food inflation has been weighing high on the Indian economy.

In order to tame the headline inflation, which is near to the double digit, the RBI has raised its key interest rate – repo rate to 8.5 per cent by 25 basis points on Tuesday. The apex bank has made variation in the key interest rates for 13th time to check the inflation in India.

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Food Inflation mounts to 10.6%

The food inflation in India climbed to 10.60 per cent for the weekended on October 8, according to a data released by the Ministry of Commerce & Industry. On Thursday, the food inflation touched the double digit mark as it was expected.

The headline inflation was also near to the double digit mark. It is reported that the soaring vegetable prices moved the food inflation above the double digit mark for the week ended on October 8.

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Growing Indian Economy?

The recession like situation across the globe has been alarming the countries towards the efforts to be taken to check their economy. The European crisis and debt crisis have not only tumbled the stock markets across the world but also rattled the confidence of even individual investors.

In the recession time back in 2008, the Indian and Chinese economies have absorbed the impact and bailed out from the clutches of the economic slowdown. But this time the recession will have equal impact on these biggest economies of the Asia too.


In India the situation has been more panic as here the headline inflation is near to double digit while the food inflation is also just adding insult to injuries.

Perhaps, the CAG report about the UPA government’s performance is rightly indicating about the role of the government in checking the economic shortcomings.


The hike in the petrol, diesel, LPG rate by the government forced the household to spend more on these comparing to previous prices. That ultimately has disturbed the budget of household. The soaring prices of vegetable, food items and other essential goods, proved that the market is now out reach of the common man – Aam Admi, the core agenda or concept of the UPA government.


Interestingly, the Planning Commission at a proper time redefined the meaning of the BPL (Below Poverty Line), which says the any person having 32 rupees to spend in a day for this entire family on food, clothing etc is a not a poor or would not be considered as under the BPL.


Reality always bits, as Rs.32 the cap to redefine is not sufficient for even one man in the capital or sub-urban areas in the country. Ironically, the government further hiked the price of fuel, which ultimately will have impact on the prices. And recently, the Railway too hiked the freight charges.


It is expected that good reached to market via, the train would be sold dearer following hike in the freight charges. However, it is clear that the market conditions are adverse to slide in the price. It can be expected that the Prime Minister may find some solution at the meeting today, to address the inflation and slowing down economy.

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PM to discuss over slowing economic growth and high inflation today

The Prime Minister Dr. Manmohan Singh will chair a meeting today in the capital to discuss slowing economic growth and high inflation. The high inflation which is at around 9 per cent and the economy to face the recession sort of situation.

The apex bank had hiked the key interest rates 12 times since March 2010 to tame the inflation in India. The headline inflation was recorded at 9.27 per cent in the month of September, while the food inflation was at 9.32 per cent for the weekended October 1.

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Food Inflation mounts to 9.41%

Food inflation in India has gone by 0.28 per cent to 9.41 per cent in this week comparing to 9.13 per cent recorded in the previous week ended at September 24. The government data shows that the costly vegetables and other products pushed the food inflation in India.

The high food inflation and the high headlines inflation have been big concern for the economy as well as for the people. The apex bank has revised the key interest rates 11 times since March 2010, but hardly there was any impact on the headline inflation in India, which is zooming near to a double digit mark.

The plunging stock market due to the negative sentiments from the debt crisis made the investors keep a option open over their safe investments. However, today the market Bombay Stock Exchange regained confidence of investors, by achieving the 16,000 points market in the intra-day trading session.

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Rs.32 BPL Cap in India?

Rs.32 Below Poverty Line(BPL) cap in India has been widely discussed across the world targeting the Planning Commission of India. Well, lets not get into the controversy rather discuss the welfare economics.

In India, there are many poor people struggling for a square meal and its mere truth, no one can't deny it. Data or statistics defines the meaning of poor or the transgression in other.

Lets consider a simple fact about the effectiveness of the poverty eradication programmes or schemes since Indian independence in 1947 to current technological era of 2011. Is there any yardstick to measure how much we succeed eradicating poverty?

Even after five decades of independence in India, roti, kapda aur makan, electricity, water are the major election issues. That shows there is nothing change in ground level.

Now lets talk a bit about the new definition for poverty/poor in India. If I'm not wrong then, any person who earns or has more than or equal to Rs.32 is not a poor at all. Right you read the proper one, its not a joke at all.

In the country, where the inflation is near to double digit and food inflation is out of the common man. Household budget is out of control for the middle class and poor families in India. And value of Rs.32 is nothing but a simple measurement, but reality always bites.

 The bottom-line  is,  RBI changed rates for 11 times, government hiked the pertol price and gas price, sky rocket vegetable & essential commodities, where this Rs.32 fits into a family's expenses?

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Food Inflation eases to 9.03%

Food inflation for the week ended Aug 6 eased to 9.03 per cent from 9.90 per cent recorded in the previous week. The finance minister Pranab Mukherjee said still the rate of the food inflation is unacceptable. The BSE Sensex and Nifty closed in red on Thursday.

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Food inflation slides to 7.33%

The food inflation fell to 29 month lowest of 7.33 per cent for the week end July 16 from 7.58 per cent. This is the second consecutive fall recorded in the food inflation according to the data released by the government of India.

Does that mean, food items become cheaper in the country? No, there is fall in the prices of food items but the tag should be considered for long-run. The headline inflation stands at 9.44 per cent in June 2011 and it was 9.06 per cent in May 2011.

Adding insult to injuries, the government has hiked the price of petrol, diesel, kerosene and LPG so as, the Reserve Bank of India hiked the key interest rates for 11th time this week reviewing its monetary policy.

The complete impact has been shifted by the wholesales and bankers to their customers. However, the easing figures in the food inflation tough bit relaxing the feel of pinch of the people in the country.

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Inflation rises to 9.44% in June

The inflation mounts to 9.44 per cent from 9.06 per cent in June. The inflation in last June was around 10 per cent.

To check the inflation, the Reserve Bank of India had hiked the interest rates for ten times since March 2010.

Following that the hike from RBI, most of the banks have hiked the primary lending rates making loans dearer for the customers.

The central government adding insult to injuries hiked the diesel, LPG and kerosene which escalated the inflation further.

Experts believe that the high inflation might is the biggest concern for Indian economy.

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Cas sales slide due to high inlfation in June 2011

The inflation hit hard on the car sale in India. In the month of June 2011, the car sales decreased by 4.3 per cent in the top three car segments.

Maruti Suzuki, Hyundai Motor and Tata Motors, companies have witnessed a drop in combined sales of 4.3% in June 2011.

The inflation has been the major reason for the slide in the auto business in India. The auto market is also badly affected due the inflation and variation in the interest rates by the Reserve Bank of India.

Following the hike in the interest rate to tame the inflation by the RBI, the banks - ICICI, IOB, Canara Bank have raised their primary lending rate.

That make the loans more costlier for the consumers. It is speculated that in the next quarter also the sales might get affected due to the costlier car loans.

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Food Inflation falls to 7.7 %

Good news, food inflation for the week ended June 18 fell to 7.78 per cent from 9.13 per cent as measures in the previous week.

According to the data released by the government of India, the vegetable were cheaper by 10 per cent for the week ended June 18.

The food items weights 20 per cent of the WPI. Headline inflation was at 9.06 per cent in May 2011.

The government's recent hike in the price of diesel, LPG and kerosene, seem have not impact on the food inflation.

Experts were speculation that hike might fuel the spiral inflation in India. Some extend that is possible in the long-term, and the headline inflation may go up to double digit.

The inflation was in double digit previous year. RBI had raised the interest rated for 10 times since March 2011 to contain the inflation.

The fall in the food inflation is a big relief for the government, as it has been criticized for its economic policies.

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Ahluwalia Expects Inflation will ease by Dec 10

The Deputy Chairman of Planning Commission, Montek Singh Ahluwalia expects the inflation will be down by the end of this year. He is also optimistic about the good growth of Industrial Output. He added that there was no need to quicken the monetary policy contain inflation, as IIP is back on its track. Last year the IIP was in negative slope and now the growth is remarkable.

Any tighten in the monetary policy will flush more money or shrink the liquidity in the market. In the both cases are not good for the economy. It can be expected that by the end of this year the market will revive and the inflation will also ease.

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