The Reserve Bank on Friday said the agriculture growth will be muted this fiscal on account of the impact of poor monsoon on kharif crops.
Ahead of the first quarterly review of credit policy on Tuesday, RBI Governor D Subbarao on Friday met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee to review the macro economic situation.
Monsoon is this year expected to bring 19 per cent less rainfall than usual, resulting in an equivalent decline in sowing activities.
Warning that the worst may not be over yet, Reserve Bank Governor D Subbarao has said the global economic recession may not only continue through 2009 but could prolong to the next year as well.
RBI chief banks on 'significant measures' to battle a 'significant crisis'.
The stronger than expected monsoon has not yet softened food inflation as much as it should have and in particular, vegetable prices have been impacted by weather-driven supply disruptions, said RBI Governor D Subbarao while unveiling the first quarter monetary policy review.
While making it clear he will continue with the strategy followed by RBI so far on inflation and exchange rate management, RBI Governor D Subbarao said, "We will be monitoring the situation closely and continuously, be mindful of implications of our monetary stance on the growth prospects and take action as appropriate." He added, "I am not sure whether we can say inflation is softening consistently, but the decline in the Wholesale Price Index is satisfying."
India's growth story will continue despite a slight deceleration, but there will be no recession as in some advanced economies, Reserve Bank of India Governor D Subbarao said on Saturday. Pegging GDP growth for FY'09 at 7.5-8 per cent, he said, this was 'our best growth estimate', even though there were other estimates ranging from 7.2-8.7 per cent.
The Reserve Bank may give up its opposition to the proposal of a monthly compilation and release of inflation data, with D Subbarao moving to the central bank from the finance ministry, which was open to the idea of a shift in the time table of the Wholesale Price Index.
Telecom Secretary DS Mathur has told the finance ministry that a change in the entry fee that operators must pay for a telecom licence cannot be considered since the matter was approved by the Cabinet in October 2003. The letter, written late last month, was in response to a letter by Finance Secretary D Subbarao, who had requested the department of telecommunications to "stay" the issue of new licences and those for cross-over technology (from CDMA to GSM services).
'There are deeper, underlying, forces at work and we need institutional arrangements to guard against them.'
The Bharatiya Janata Party (BJP) on Tuesday welcomed the appointment of noted economist Raghuram Rajan as RBI governor but advised him not to compromise on the autonomy of the institution or get cowed down by the government.
Going by its past experience of differences between the central bank and the finance ministry, the government might prefer a person who could bridge this gap.
Traditionally, Prime Minister picks the RBI Governor after consultation with the finance minister.
Experts point to the bitter experience of countries including Mexico, Thailand, South Korea and Russia and desist from going forward with plans of issuance of such securities. They say rather than going abroad, the country should increase participation of foreign investor in the government securities which does not have any forex risk.
US Federal Reserve Chairman Ben S Bernanke held talks with RBI Governor Duvvuri Subbarao in Mumbai.
India has 26 public sector banks, 22 private sector banks and 56 regional rural banks.
Duvvuri Subbarao recounts how his tensions with P Chidambaram and Pranab Mukherjee, then finance ministers, over monetary policy spilled over into other issues in the central bank in this excerpt from Who Moved My Interest Rate?, his memoir of his term as Reserve Bank of India governor.
The RBI cut interest rates on Friday by a quarter point for the third time since January.
Given that food inflation remains high, the inflation outlook will be influenced by concerted efforts to break food inflation persistence.
Let's take a look at the best and worst central bankers.
Fifteen people, mostly college students, were on Wednesday killed and 30 others injured when a state-run bus in which they were travelling fell down a dug up area adjoining a hilly road in Andhra Pradesh's Anantapur district.
Moody's has cautioned the government against targeting double-digit gross domestic production expansion saying any growth beyond 7 per cent without reforms will fuel inflation that will result in 'more painful' future adjustments.
High current account deficit is leading to the rupee weakening.
Guidelines say that new banks need to set up 25 per cent branches in unbanked areas.
India's chief economic adviser, Raghuram Rajan has been appointed as the governor of the Reserve Bank of India.
The Reserve Bank on Tuesday lowered the growth projection for the current fiscal to 5.5 per cent from its earlier estimate of 5.7 per cent and asked the government to undertake policy measures to improve investment climate.
The BSE benchmark Sensex on fell by 54 points in early trade due to profit-booking after two sessions of gains amid disappointing industrial production and retail inflation data.
Endorsing Finance Minister P Chidambaram's call to banks to pass on the benefit of rate cuts to customers, RBI Governor D Subbarao on Thursday said the central bank is also "very conscious" of the need to be supportive of economic growth.
Declining value of the rupee, widening Current Account Deficit (CAD) and the impact of likely tapering of US bond purchases are some of the key issues which will keep Raghuram Rajan busy.
Policymakers say falling rupee could lead to rise in prices of imported items such as edible oil and build up inflationary expectations in the economy.
Officials, however, said one person's thinking might not change the views of the institution.
The 30-share Sensex closed at 19,230 mark up 283 points whereas the 50-share Nifty ended higher by 87 points at 5,699 levels.
M&M, Bajaj Auto, Tata Motors and Hero Moto and Maruti Suzuki from Auto sector surged between 1-4%.
The government and the RBI are working together to tackle the country's economic problems but there is no "magic wand" to fix them, said Raghuram Rajan, who will take over as central bank governor next month.
Broader markets ended weak with mid-caps falling 0.4 per cent while small-caps declined 1.3 per cent on the BSE.
Markets opened sharply lower on Tuesday, amid weak Asian cues, on concerns that the liquidity squeeze by the central bank would hurt growth and impact equity inflows.
RBI raised lending rates to commercial banks 2 per cent to 10.25 per cent making loans costlier.
Conceding that there has been risk aversion among the lenders stemming from their rising asset quality concerns, the Governor said banks should lend to productive sectors, notwithstanding the importance of asset quality, by being discerning.
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