Economists expect another rate hike on 27th July

The consensus is that RBI will hike the repo and reverse repo rates by 25 basis points, but there is no expectation of an increase in CRR

Economists expect the Reserve Bank of India (RBI) to hike its key short-term lending and borrowing rates on 27th July to tame rising inflation, which is already in double-digits, reports PTI.

The opposition has mounted pressure on the government to rollback fuel prices and curb inflation, but economists said the RBI's expected move will not be guided by the National Democratic Alliance (NDA) and Left-sponsored Bharat Bandh yesterday.

They, in fact, favoured the government's move to hike petroleum prices.

"The idea is to moderate economic growth by raising interest rates and thereby control inflationary expectations.

I don't think that due to the protests by the opposition, RBI will be forced to hike its rates faster," Crisil chief economist D K Joshi said.

Axis Bank chief economist Saugata Bhattacharya also said, "Our sense is that there will be 25 basis points hike in both repo and reverse repo rates on July 27. They will not do anything to the cash reserve ratio (CRR). By that time, liquidity will be less restrictive... it would have eased significantly. So, they will not touch the CRR."

Economic think-tank ICRIER Director Rajiv Kumar said he expects the RBI to increase the repo (short-term lending) and reverse repo (borrowing) rates by another 25 basis points each in its July review.

"They will not be changing the CRR. The hike in rates will help to bring down inflation. Besides, inflation is expected to go down on base rate effect and good monsoon. We expect inflation to be 6.5% by March," he said.

The CRR is the proportion of deposits that banks are required to keep with the RBI in cash. Since liquidity in the system is tight, due to a more than Rs1 lakh crore outgo towards payment for spectrum for high speed mobile and broadband services, besides advance tax payment, the Reserve Bank may not hike the CRR.

The opposition NDA and the Left parties had yesterday organised a Bharat Bandh to press for a rollback of the hike in fuel prices and tame inflation.

The government had last month deregulated petrol prices and increased the rates for other fuels.

The central bank, in an unscheduled move last week, hiked the short-term lending and borrowing rates (repo and reverse repo) by 25 basis points each to 5.5% and 4%, respectively, to cool down inflation.

Even as food inflation sharply declined by almost four percentage points, it still stood at 12.92% during the third week of June. Overall inflation is already in double-digits, at 10.16% in May.

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RIL fixes limit on gas supply contracts

Reliance Industries has told the government that it will not sign contracts to supply gas from its Krishna-Godavari D6 fields beyond 60 million units a day, as it may not be able to sustain higher production

Reliance Industries (RIL) has told the government that it will not sign contracts to supply gas from its Krishna-Godavari (KG) D6 fields beyond 60 million units a day, as it may not be able to sustain higher production, reports PTI.

The government has so far allocated about 64 million standard cubic metres per day (mmscmd) of output from the eastern offshore fields to consumers in the power, fertilizers, steel and refineries sectors.

Of this, RIL has so far signed or committed to sign agreements for supply of 57.8 mmscmd of gas and told the oil ministry at a review meeting last month that it can only sign contracts on a firm basis for another 2.2 mmscmd, an official said.

"RIL does not want to sign and then fail on deliver," he said. "The company has told the government to choose users for another 2.2 mmscmd from the likes of Essar Oil's Vadinar refinery, who were allocated KG-D6 gas."

Essar Oil was allocated 0.6 mmscmd of gas on a firm basis, but the company has not yet signed a Gas Sales and Purchase Agreement (GSPA) with RIL, as its Vadinar refinery in Gujarat was not ready to receive gas from the field till recently.

The official said RIL has told the oil ministry that it can presently sustain output of only 53-54 mmscmd from the Dhirubhai-1 and 3 fields in the KG-D6 block and 7-8 mmscmd from the MA field in the same area.

The company had in December last year tested facilities at KG-D6 for a peak production rate of 80 mmscmd, but it estimates this level of production can only be achieved by the end of this year or early next year.

Oil regulator Directorate General of Hydrocarbons (DGH) has endorsed RIL's view on limitation of production, saying the output was in line with the approved Field Development Plan (FDP).

According to the FDP, peak output of 80 mmscmd was envisaged in 2011 and is to last till 2016.

The official said customers with pending allocations are those who have not been in a position to take gas for a considerable period of time.

It has been suggested that since there can be no reservation of gas, as stipulated by the Empowered Group of Ministers (EGoM), which framed the Gas Utilisation Policy, such allocations should automatically be deemed to have lapsed after a reasonable period. The oil ministry has so far not taken any view on this, he said.

Of the current production, about 14 mmscmd is sold to fertilizer plants, 28 mmscmd to power plants and 10 mmscmd to petrochemical plants and refineries. The remaining 7 mmscmd of gas was consumed by other sectors such as sponge iron plants, LPG, city gas distribution and the East-West pipeline.

The official said RIL stated that sustained production at the current level of 60 mmscmd is required for a longer period to gather more data and estimate the true production potential of the field.

Its assessment has been validated by a technical team from oil regulator DGH, which in late May assessed the performance of the fields and the ultimate potential for a possible increase in production.

The DGH team observed that several reservoir complexities existed — such as the large numbers of sands, connectivity, interference, cross flow and permeability variations — making the interpretation of acquired data difficult, he said.

RIL has also prepared a new geological model based on the data collected so far. This is being studied to assess the performance of the field so far.

The company has so far drilled 18 production wells in the D-1 and D-3 fields, of which 17 are in production. The remaining wells will be put on production after a work-over job.

Most recently, RIL signed GSPAs for supply of 0.86 mmscmd to the Koyali refinery of Indian Oil Corporation (IOC) and 0.2 mmscmd to the Mumbai unit of Hindustan Petroleum Corporation Ltd (HPCL).

RIL is in the process of signing GSPAs with IOC for supply of 0.74 mmscmd to the Mathura refinery and with NTPC for 1.51 mmscmd.

In addition, 1 mmscmd gas is required for operation of the East-West pipeline, which transports KG-D6 gas from Kakinada, in Andhra Pradesh, to Baruch, in Gujarat.

"The total number of firm GSPAs for KG-D6 gas, as well as gas required for pipeline operations already adds up to a quantity of 57.8 mmscmd of gas," the official said. "Based on the production of KG-D6, RIL can commit only 60 mmscmd for sale on a firm basis. Thus, of the pending allocations, additional GSPAs for only another 2.2 mmscmd can be signed now.

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Bafna Pharma receives MHRA approval for Clonazepam tablets

Chennai-based Bafna Pharmaceuticals Ltd said it received site approval from UK-based Medicines and Healthcare Products Regulatory Agencyfor its products Clonazepam 0.5 mg and Clonazepam 2 mg tablets.

Clonazepam belongs to a group of drugs called benzodiazepines.
Benzodiazepines are medications that help relieve nervousness, tension, symptoms of anxiety, and some types of seizures by slowing the central nervous system.

On Tuesday, Bafna Pharma shares closed 2.9% down at Rs47 on the Bombay Stock Exchange, while the Sensex ended at 1% up at 17,614 points.

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