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RBI rate hike is right move: Montek Singh Ahluwalia

“Keeping these (short-term) rates low would not help as the long-term interest rates would go up due to inflation” Planning Commission deputy chairman Montek Singh Ahluwalia said

New Delhi: Describing the Reserve Bank of India’s (RBI) decision to raise key interest rates as the ‘right move’, the Planning Commission today said the tight monetary policy will not hurt growth, which is projected at 8.25% to 8.5% for the current fiscal, reports PTI.

“I think it is certainly the right move (of RBI) to contain inflation. This is a widely expected move,” Planning Commission deputy chairman Montek Singh Ahluwalia told reporters here.

“I don't think it will impact economic growth. I have already said it would not be 9% this fiscal. It would be in the range of 8.25% to 8.5%, which is a reasonable thing to plan for,” he said.

Continuing with its efforts to contain inflation, the central bank raised key short-term lending and borrowing rates by 25 basis points each today for the 10th time since March 2010.

While the short-term lending (repo) rate has been raised to 7.5%, the short-term borrowing (reverse repo) rate has been hiked to 6.5%.

Inflation stood at over 9% in May, much above the central bank’s comfort level of 5%-6%.

On the concerns expressed by the RBI in its mid-quarter review over rising prices, Mr Ahluwalia said, “Inflation remains in the worrying area. Therefore, it is entirely right that both the monetary and fiscal policy should be supportive of containing inflation.”

About the impact of the RBI hiking short-term borrowing and lending rates on economic growth, with credit becoming dear for industry and other consumers, he said, “Keeping these (short term) rates low would not help as the long-term interest rates would go up due to inflation.”

Elaborating on the reasons for lowering the growth target from 9% this fiscal to 8.25%-8.50%, he said, “The reason for lowering economic (growth) projection is that farm output growth would not be as high this fiscal as 6.6%, which was recorded in 2010-11.”

The country registered an economic growth rate of 8.6% last fiscal mainly due to a smart recovery in farm output, which stood at 6.6%.


Hindustan Zinc pays Rs200 crore advance tax in Q1

Hindustan Zinc attributed the increased tax outgo to “improved efficiency in operations and expansion in business”

Hindustan Zinc said it has paid Rs200 crore as the first advance tax instalment for the April-June quarter of the current fiscal, double than the amount it had paid in the same period last year.

The Vedanta Group company, in a statement, attributed the increased tax outgo to “improved efficiency in operations and expansion in business”.

The company further said that it produced 9,64,000 tonne of zinc-lead in 2011 and plans to commission 1 lakh tonne lead smelter capacity this year.

Besides this, the Anil Agarwal-promoted company is also aiming to produce 500 tonne of silver by March 2012, following the expansion of its Sindesar Khurd mine, a silver rich mine in Rajasthan, the statement said.

Simultaneously, Hindustan Zinc is also aiming to generate 275 MW of wind power by September this year as part of its green energy initiative, the statement further said, adding that the wind farms are being commissioned in Rajasthan, Gujarat, Tamil Nadu, Maharashtra and Karnataka.

On Thursday, Hindustan Zinc ended 0.82% down at Rs132.60 on the Bombay Stock Exchange, while the benchmark Sensex ended 0.81% down at 17,985.88.


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