Hike in key rates to help moderate prices: FM

Finance minister Pranab Mukherjee said that repo and reverse repo rates have been increased by 25 basis points each, which is in tandem with the fiscal policy and thinking of the government. He hoped that it will have a salutary impact on inflationary pressure

New Delhi: Finance Minister Pranab Mukherjee today said that the Reserve Bank of India's (RBI) decision to raise key policy rates would help in moderating prices and opined that inflation might measure 7.5% by March-end as against the government's earlier projection of 7%, reports PTI.

"We can say (inflation for March-end) may be 7.5%," Mr Mukherjee told reporters in his reaction to RBI raising its own fiscal-end inflation forecast to 8% from 7% previously.

The RBI in its bid to rein in inflation also raised short-term lending and borrowing rates by 25 basis points in its mid-quarter monetary policy review meeting today.

This is the eighth time that the apex bank has raised the key rates since March 2010.

On the RBI's rate hike, Mr Mukherjee said, "It is good. It will have its impact on the inflationary pressure."

He further said that repo and reverse repo rates have been increased by 25 basis points each, which is in tandem with the fiscal policy and thinking of the government.

Mr Mukherjee added that the difference between repo and reverse repo rates have been maintained at 1%, adding that, "I do hope it will have a salutary impact on inflationary pressure."

The short term lending rate (repo) has been increased from 6.50% to 6.75%, while the short-term borrowing rate (reverse repo) has been raised to 5.75% from 5.50%.

The overall inflation increased marginally in February to 8.31% from 8.23% a month ago.

Commerce and industry minister Anand Sharma said, "I hope that credit will continue to made available freely, liberally and on good terms to the industry, because investments must go in for capacity building and for additional capacity creation, which the industry is committed to do."

The minister was speaking to reporters on the sidelines of a Confederation of Indian Industry (CII) meet.

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SC to hear plea for CBI probe into Batcha’s death

The NGO-Centre for Public Interest Litigation-on whose plea a CBI probe was directed into the 2G spectrum allocation scam, pleaded before the Supreme Court that the death is related with the scam and should also be probed by the CBI

New Delhi: The mysterious death of former telecom minister A Raja's close aide Sadiq Batcha was today brought to the notice of the Supreme Court, which agreed to hear the plea for a Central Bureau of Investigation (CBI) probe in the matter, reports PTI.

Appearing for the NGO-Centre for Public Interest Litigation-on whose plea a CBI probe was directed into the second generation (2G) spectrum allocation scam, advocate Prashant Bhushan pleaded before the court that the death is related with the scam and should also be probed by the investigating agency.

He also mentioned that the state government has favoured a CBI probe into Batcha's death.

A bench of justices GS Singhvi and AK Ganguly, while agreeing to hear his plea, said, "Wait till lunch or tomorrow morning as some development might take place during the day."

Mr Bhushan said he would bring the matter before the bench again at 2pm.

47-year-old Mr Batcha died in mysterious circumstances at his home in South Chennai yesterday and his wife claimed that he committed suicide "unable to cope with the pressure" of the probe in the case.

Mr Batcha was the managing director of Greenhouse Promoters, a firm under the scanner of the CBI as well as the Enforcement Directorate (ED) in connection with the spectrum allocation scam.

He was said to have been found hanging in his house in Vannia Teynampet in South Chennai by his wife and his driver around 1300 hours yesterday.

The CBI and the ED had conducted searches at his official and residential premises here in December. He was called for questioning four times since then.

The possibility of his firms acting as a front for the former minister was being looked into.

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Food inflation eases marginally to 9.42% for the week ended 5th March

The drop in inflation, which is still above the comfort zone, is viewed as a breather for the government grappling with high price rise of essential commodities. The RBI in its mid-quarterly review today revised the inflation forecast for March-end to 8% from 7% projected earlier

New Delhi: Food inflation fell to a three-and-a-half-month low of 9.42% for the week ended 5th March, from 9.52% in the previous week, as prices of potato and pulses declined.

The drop in inflation, which is still above the comfort zone, is viewed as a breather for the government grappling with high price rise of essential commodities, reports PTI.

After remaining in double digits for several weeks, food inflation came down to single digit in the last week of February.

This is the lowest rate of food price rise since the week ended 27th November last year when it was 8.69%.

Food inflation was 20.59% in the comparable period in 2010.

During the week under review, prices of potato went down by over 9% year-on-year, while that of pulses fell by 3.05%.

The government had earlier exuded confidence that the expected record crop of wheat and pulses will help stabilise the rise in prices of food items. Food inflation remained in the double digits for most of 2010.

However, for the week ended 5th March, prices of other food items continued to rise.

Cereal prices went up by 3.88% year-on-year, while rice became dearer by 2.75%. Price of wheat also rose marginally by 0.69% on an annual basis.

While there has been drop in potato prices, vegetables on the whole became dearer by 8.71% on annual basis. Onion was expensive by 6.65%.

During the week under review, fruit prices rose by 19.39% year-on-year. Milk also became dearer by 7.16%.

Eggs, meat and fish prices went up by 13.10% on an annual basis.

Meanwhile, prices of non-food articles went up by 23.03% year-on-year. While fuel and power became dearer by 12.79%, petrol became costly by 23.14%.

The headline inflation in the country has remained above 8% since February 2010. According to latest data, the overall inflation in February this year was 8.31%.

The RBI in its mid-quarterly review today revised upwards the inflation forecast for March-end to 8% from 7% projected earlier.

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