Exchange rate is always on RBI radar: RBI chief

RBI governor D Subbarao said it was not possible to say what the RBI had done in the forex market which will be known when the figures were released and would be able to get an idea to the extent or otherwise of intervention

Kolkata: Amidst high volatility in the rupee’s exchange rate in respect to the US dollar, the Reserve Bank of India (RBI) on Thursday said the currency’s movement is “always on its radar” and the central bank will come out with a definitive statement in this regard in its mid-quarterly meeting on 16th December, reports PTI.

“I cannot say whether we can intervene or not but the exchange rate is always on the radar of RBI,” governor D Subbarao told reporters after the central bank's board meet here.

Mr Subbarao said the rupee had depreciated 14% since early August due to inflationary pressures.

“We will be coming out with a more definitive statement in the 16th December review meeting,” he added.

“But as of now our understanding of some amount of rupee depreciation and assessment of oil price has been built into the projection of 7% WPI (wholesale price index) inflation by March 2012.

Any revision of this will come out on 16th December,” Mr Subbarao said.

He said it was not possible to say what the RBI had done in the forex market which will be known when the figures were released and would be able to get an idea to the extent or otherwise of intervention.

“But as far as rupee depreciation over the last three months is concerned, it had been a result of developments outside the country, particularly Europe,” he observed.

“This was because there were no inflows coming in a significant way and the exchange rate has been determined by the current account deficit,” he said.

“Three things which we should do to attract more inflows into India, are adjust interest rates for NRI deposits, increase FII limits in sovereign and corporate debt and finally asking the ECB borrowers to bring back money to the country,” Mr Subbarao said.

“In order to determine whether to intervene or not, our guide is our policy,” he said.

RBI’s policy of intervention was to manage volatility or macro-economic instability.

Another factor which would have to be taken into account was on how expectations would be shaped on what RBI did.

On the government’s part, efforts would also have to be made to bring more FDI flows into the country.

Asked to comment on criticism from certain quarters that RBI’s tight money stance had not been able to contain demand as reflected by high inflation rates, Mr Subbarao said “inflation has resulted from supply shocks and demand pressures.

“Our action had been to contain inflation and there had been criticisms to that,” he said. “Supporting growth is our objective as also to maintain price and financial stability.” 

Regarding food inflation, RBI deputy governor Subir Gokarm said that food prices were responding due to two good monsoons in a row and improvement in supply situation.

“We need long-term supply responses to moderate food inflation on a more sustained basis,” he added.

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India adds 7.79 million mobile users in October

According to the data released by TRAI, mobile subscriber base increased to 881.4 million by October end from 873.61 million in the preceding month, registering a growth of 0.89%. With this, the overall teledensity (telephones per 100 people) in India reached 76.03%

New Delhi: Telecom operators added 7.79 million mobile subscribers in October 2011, taking the total number of telephone users in the country to 914.59 million, reports PTI quoting sectoral regulator Telecom Regulatory Authority of India (TRAI).

According to the data released by TRAI, mobile subscriber base increased to 881.4 million by October end from 873.61 million in the preceding month, registering a growth of 0.89%.

With this, the overall teledensity (telephones per 100 people) in India reached 76.03%.

However, the number of active mobile subscribers, according to the visitor location register (VLR) data, during the month of was 626.18 million.

VLR numbers provide details on active customers at any given point of time, excluding switched-off and out-of-the- coverage area customers.

The growth in the wireless category was led by Uninor, which added 2.66 million new users, taking its subscriber base to 32.31 million by the end of October 2011.

Tata Teleservices lost 0.93 million and its subscriber base stood at 87.83 million.

The country’s largest private operator Bharti Airtel added 0.94 million subscribers, taking its user base to 173.73 million. Vodafone added 0.92 million new customers to take its user base to 145.91 million.

Idea Cellular and Aircel added 1.63 million and 0.48 million users, respectively, during the period. Idea's subscriber base stood at 101.81 million at the end of October 2011, while that of Aircel stood at 60.28 million.

RCom (Reliance Communications) added 1.03 million new subscribers to take its user base to 148.11 million, while SSTL added 0.74 million new users to take its total userbase to 14.01 million.

State-run telcos BSNL and MTNL added 0.40 million and 31,788 new users in October. The subscriber base of BSNL stood at 96.19 million and 5.61 million, respectively.

About 25.38 lakh subscribers submitted request for MNP in October 2011. Since the introduction of MNP in November last year, about 231.66 lakh subscribers across the country had submitted requests, till October, for changing their service providers while retaining their mobile numbers.

In MNP Zone-I (Northern and Western India), maximum number of requests have been received in Gujarat (22.39 lakh), followed by Maharashtra (19.10 lakh).

In MNP Zone-II (Southern and Eastern India), maximum number of requests have been received in Andhra Pradesh (19.46 lakh) followed by Karnataka Service area (19.18 lakh).

Wireline category subscriber base declined to 33.19 million in October from 33.31 million in September, TRAI said.

Broadband subscription reached 12.98 million in the reported month from 12.84 million in September.

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Crisil too scales down GDP growth to 7%

The forecast has been scaled down in view of the deterioration in the global economic outlook led by the Eurozone recession, a weaker-than-anticipated domestic investment climate and the limited fiscal space to stimulate the economy

Mumbai: Amidst bleak global economic outlook and weak domestic investment scenario, Crisil Research, too, has lowered India’s gross domestic product (GDP) growth forecast for current fiscal to 7% from its October estimate of 7.6%, reports PTI.

The forecast has been scaled down in view of the deterioration in the global economic outlook led by the Eurozone recession, a weaker-than-anticipated domestic investment climate and the limited fiscal space to stimulate the economy, a Crisil report said yesterday.

“GDP growth is expected to slip to 6.7% in the second half of this fiscal from 7.3% in the first half. This will restrict the overall GDP growth at 7%.

This would be the second-lowest growth in the past nine years after 6.8% in 2008-09, the peak of global financial crisis,” Crisil managing director and CEO Roopa Kudva said.

A potential recession in Eurozone would affect India’s growth by adversely impacting exports and foreign investments during the second half as well in FY12-13, the report said.

Eurozone accounts for nearly 15% of the country’s merchandise exports. In addition, major IT/ITeS companies have a significant dependence on the Eurozone. In the past, business cycles here and in the Eurozone have largely moved in tandem, it said. 

Industry growth is projected to slow to 4.5% this fiscal, given industrial GDP grew at a sluggish 4.2% in the first half and a limited upside in growth during the second half, Ms Kudva said.

Industry growth will remain constrained by lagged impact of RBI’s interest rate hikes, weak exports due to slipping demand, particularly from Europe and growing bottlenecks in the mining sector, it added.

“We have cut down our services sector growth forecast to 8.9% for this fiscal as slowing industry growth will reduce demand for services,” added Ms Kudva.

On a positive note, Crisil has raised its agriculture sector growth forecast to 3.8% from 3.2% earlier on account of the timely and steady progress of the monsoon, which enabled better sowing during the Kharif season and improved prospects for the Rabi crop.

A worsening outlook for the Eurozone has prompted the agency to revise its rupee outlook too. A mild recession in the Eurozone is expected during the first half of calendar 2012, to be followed by a moderate recovery.

In this scenario, the supply of dollars from portfolio inflows will be lower than previous expectations of a recession-free Eurozone in 2012. Hence the research agency has moved up the rupee/dollar forecast to 48 from 45-46.

According to Crisil chief economist Dharmakirti Joshi, “If the European scenario of short-lived recession pans out as expected currently and there are signs of recovery in the second half of 2012, portfolio inflows to domestic market would improve by March 2012 over the current levels.

“The financial markets are forward-looking and anticipate changes in real economy in advance. This will help improve the supply of the dollar towards March 2012 and help the rupee appreciate to 48 from current levels of 51.50.” 

Crisil now expects the fiscal deficit to stay at 5.5% of GDP for 2011-12 versus the budgeted estimate of 4.6%. The current revision takes into account rising expenditure burden due to ballooning subsidies and slow revenue growth due to a tepid growth outlook.

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