Diesel hike gives RBI room to cut rates: PMEAC

Economists feel that the decision to hike diesel prices has provided room for RBI to ease monetary policy to give thrust on growth

New Delhi: Welcoming the fuel price hike decision by the government, Prime Minister's Economic Advisory Council (PMEAC) and economists have said the decision provides room for Reserve Bank of India (RBI) to ease monetary policy to give thrust on growth, reports PTI.
The hike in diesel price will bring down burden on fiscal deficit even as it will put pressure on inflation. Inflation is expected to go up at least 0.4% as diesel price hike will have cascading effect, they said.
Commenting on the government decision, PMEAC Chairman C Rangarajan said "We have to keep balance in price of diesel and petrol. Recently, we have on several occasions but we have not acted on diesel."
"I think the opportunity of action for RBI is provided by this action of the government...The government has showed that it can take a very hard decision," Rangarajan added.
Biting the bullet, the government has raised the diesel price by a steep Rs5 per litre and capped the number of subsidised cooking gas cylinder to six per household a year, decisions that will rake in an additional Rs20,300 crore to the oil companies.
Echoing similar views, Department of Economic Affairs Secretary (DEA) Arvind Mayaram said the hike in diesel prices was 'difficult but necessary decision'.
Yes Bank's Chief Economist Shubhada Rao said, "Rise in diesel price will increase inflation by 35-40 basis points." 
CRISIL Chief Economist DK Joshi also welcomed the government's decision the government's decision to hike diesel prices by Rs5 per litre.
"Diesel has larger weight than petrol, it (hike in petrol price) will have inflationary effect but it is a good decision. It will put pressure on inflation in short but in long run will have good impact on economy," Joshi said.


IRB Infra promoters sell shares worth Rs147 crore

Ideal Toll and Infra and Dattatrey Mhaiskar sold about 1.2 crore shares in IRB Infra at an average price of Rs123 through open market

Mumbai: Two promoter entities of construction company IRB Infrastructure Developers have offloaded around 1.2 crore shares of the company for more than Rs147 crore through open market transactions, reports PTI.


Ideal Toll & Infrastructure, which held 1.06 crore shares or 3.19% stake in the construction company at the end of June quarter, sold 81.15 lakh shares, according to bulk deal data available with the stock exchanges.


In addition, Dattatray Pandurang Mhaiskar - who held 94.78 lakh shares amounting to 2.85% holding in IRB Infrastructure as of June quarter - offloaded 38.84 lakh shares on the NSE. Mhaiskar also sold 47.98 lakh scrips on the BSE.


The shares were sold at an average price of Rs123, valuing the deal at Rs 147.60 crore.


HSBC Global Investment Fund A/C Indian Equity Fund, has acquired 35.39 lakh shares of IRB Infrastructure for Rs43.53 crore.


At 12.37pm Friday IRB Infrastructure was trading 2.5% higher at Rs1216.2 on the BSE, while the benchmark Sensex was also up 2% at 18398.



Nem Chandra Singhal

5 years ago

Nothing un-usual unless the promotors are connected to coalgate scam, which will be known in future.

Banks may also use SMERA ratings to assess loan risks: RBI

RBI said banks may use ratings of SME Rating Agency of India in addition to grades provided by other agencies, to assign risks to loans for computing capital adequacy requirements

Mumbai: The Reserve Bank of India (RBI) has said banks may use ratings of SME Rating Agency of India (SMERA), in addition to grades provided by other agencies, to assign risks to loans for the purpose of computing capital adequacy requirements, reports PTI.


"It has now been decided that banks may also use the ratings of the SME Rating Agency of India Ltd (SMERA) for the purpose of risk weighting their claims for capital adequacy purposes in addition to the existing five domestic credit rating agencies," the RBI said in a notification.


Currently, five rating agencies CARE, CRISIL, FITCH India, ICRA and Brickwork are authorised by the RBI to provide risk weight to loans.


Under the system, the balance sheet assets, non-funded items and other off-balance sheet exposures are assigned prescribed risk weights and banks have to maintain unimpaired minimum capital funds equivalent to the prescribed ratio on the aggregate of the risk weighted assets and other exposures.


The long term and short term ratings issued by these domestic credit rating agencies have been mapped to the appropriate risk weights applicable as per the Standardised Approach under the Basel II Framework, the RBI said.


"The rating-risk weight mapping for the long term and short term ratings assigned by SMERA will be the same as in case of other rating agencies," the notification added.


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