Risk aversion leading to 'lazy banking'; lenders prefer govt securities
Despite a higher CAD in the first quarter, capital inflows were broadly adequate to finance the current account gap, requiring only a marginal drawdown of foreign exchange reserves.
Making a case for increasing prices of petroleum products and deregulating diesel prices, the Reserve Bank on Monday said these steps are necessary to contain fiscal slippages and arrest decline in growth.
In its macroeconomic review report, the RBI has cut FY13 GDP growth forecast to 5.7% vs 6.5%.
According to the Reserve Bank of India's second quarter Macroeconomic and Monetary Developments review, key deficit indicators widened during the April-August period of 2011-12, compared to the corresponding period of the previous year.
The Reserve Bank of India on Monday gave strong hints of another hike in its key interest rates at the policy review on Tuesday, saying that high inflation requires further monetary tightening, slowdown in growth notwithstanding.
RBI says food supply constraints to taper off only over time.
In an indication of further tightening of monetary policy, the Reserve Bank of India's (RBI) pre-policy report today said that managing inflation and inflationary expectations will be the dominant theme of monetary policy management in 2010-11.
The Reserve Bank hinted at a marginal hike in key policy rates when it reviews its monetary stance tomorrow, saying inflation was still above the comfort zone and that there was uptick in credit to non-food sectors.
Professional forecasters have added to Reserve Bank of India Governor Duvvurri Subbarao's dilemma on timing the exit from an accommodative monetary policy stance.
"Since pass-through of higher international oil prices to domestic prices remains incomplete, inflation remains suppressed," Reserve Bank said in its Macroeconomic and Monetary Development Review released in Mumbai.
The tenure of the committee will be for two years up to June 30, 2011, the central bank said. The panel will review the monetary developments in the country keeping in mind the macroeconomic scenario and will advise the banking regulator on the stance of monetary policy due on July 28.
Macroeconomic and Monetary Developments: First Quarter Review 2007-08.
The Reserve Bank of India on Monday said the steps initiated by the government in recent weeks are expected to help control inflation and inflationary expectations. Listing out the possible pressure points, including high oil prices that are expected to stay at elevated levels, the RBI report on Macroeconomic and Monetary Developments in 2007-08 noted that inflation risks due to petroleum prices remained incipient.
The recently released RBI First Quarter Review of Monetary Policy 2009-10 and the accompanying 'Macroeconomic and Monetary Developments First quarter review 2009-10 have indicated that on the basis of Balance of Payments (BoP) the export growth for 08-09 has declined by over 22% to 5.4% and also the import growth has declined by over 21% during the same period.
Individuals and corporate borrowers face the prospect of further interest rate increases, as the Reserve Bank of India battles inflation and high credit growth.
The manufacturing sector's robust performance was largely contributed by machinery and equipment, food products, basic metal and alloy industries and chemicals and chemical products, the RBI said.
This Statement consists of two parts: Part I. Annual Statement on Monetary Policy for the Year 2007-08; and Part II. Annual Statement on Developmental and Regulatory Policies for the Year 2007-08.
According to the Third Advance Estimates for 2007-08, the total foodgrains production is slated to reach an all-time high at 227.3 million tonnes, recording an increase of 4.6 per cent over the previous year (217.3 million tonnes). The production during 2007-08 would exceed the target set earlier (221.5 million tonnes) by 5.8 million tonnes. Notwithstanding the moderation, the growth performance was in tune with the high average real GDP growth of 8.7 per cent.
Banks are shying away from the unsecured lending market, thanks to the rising instances of defaults and recovery woes.The rate of growth in the personal loan portfolio of banks has dipped to 13.2 per cent to Rs 58,669 crore (Rs 586.69 billion) as on February 15, 2008, compared with 30.6 per cent in the same period last year, said the Reserve Bank of India in its 2007-08 report on Macroeconomic and Monetary Developments.
The country's foreign exchange reserves stood at $309.7 billion as at end-March 2008, up $110.5 billion over end-March 2007, making it the third largest stock of reserves among emerging market economies.
Reserve Bank of India Governor, Y V Reddy presented the Monetary and Credit Policy for 2006-07 on Tuesday.
India would remain among the fastest growing economies of the world in the medium-term as the country has posted a real GDP growth at 6.9 per cent in 2004-05, according to Reserve Bank of India.
Reserve Bank-sponsored professional forecasters on Monday scaled down India's growth projection to 4.8 per cent for the current fiscal from 5.7 per cent estimated earlier.
.jpg)
The document said potential growth, which hovered at 8-8.5 per cent levels in the period from the second quarter of 2005-06 to the second quarter of 2008-09, has gone down to 6 per cent.
Shifting its stance of monetary policy towards targeting retail inflation as it is an "inequitable tax", RBI today said it may exceed 8 per cent by March end and efforts will continue to bring it down.
The Reserve Bank on Tuesday said growth is expected to fall below 5 per cent in 2013-14 in absence of pick-up in manufacturing sector, but likely to recover to 5.5 per cent in the next financial year.
The RBI left key policy rates unchanged and cut the GDP growth estimate for this fiscal to 5.5 per cent from 5.7 per cent.
© 2026 Rediff.com - Investor Information - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances