The central bank has also revised its growth estimate for the current fiscal at 7% from the earlier figure of 7.6%. It has projected inflation at 7% by the end of March, but added that fiscal slippages are a “significant threat” to the economy
The Reserve Bank of India (RBI) in its quarterly review of the monetary policy, cut the cash reserve ratio (CRR)—the amount of deposits banks keep with the central bank—by 50 basis points (bps) to 5.50% from 6%. The central bank kept other rates like repo and reverse repo rates unchanged due to high core inflation in December.
The cut in CRR will ease liquidity problems faced by banks and is expected to spur growth, the RBI said. The move will lead to an infusion of Rs32,000 crore into the system. With additional liquidity by CRR cut, there is a possibility that banks may reduce the interest rate to attract borrowers.
According to Goldman Sachs, there were strong reasons for enacting the CRR cut. “First, system liquidity is extremely tight. The average daily borrowing at the repo window was Rs1.5 trillion (about $30 billion) in the week of 16th January. This is significantly above the historic borrowing, and the RBI’s preferred system deficit of (+/-) 1% of net demand and time liabilities of banks, which is roughly Rs600 billion (about $12 billion). As a result, the overnight call money rate has shot up significantly above the repo rate and is complicating monetary transmission. Indeed, the liquidity tightness is acting as an increase in the repo rate beyond the 8.50% level the RBI has raised it to. Second, the open market operations done so far have not prevented an inversion of the yield curve, and other liquidity tools are necessary. Third, with the long lags in the system, there is a need to start the easing process early to help investor and corporate confidence to kick-start the recovery in second half of 2012, in our view,” said Tushar Poddar, chief economist, India, Goldman Sachs.
The RBI retained the repo or the short-term lending rate at 8.5% while making it clear that any cut in it will only happen after moderation in inflation. Projecting a lower growth of 7% for 2011-12, the central bank said the policy actions are meant to “mitigate downside risks to growth” and anchor inflationary expectations.
“Based on the current inflation trajectory, including consideration of suppressed inflation, it is premature to begin reducing the policy rate,” RBI governor D Subbarao said while unveiling the third quarterly monetary policy review.
He said, “Even as inflation remains elevated, despite moderation, downside risks to growth have increased. The growth-inflation balance of the monetary policy stance has now shifted to growth”.
He further said slippage on fiscal deficit, crude prices and rupee depreciation are key challenges for inflation, which after remaining near double digit for almost two-years, came down to 7.5% in December 2011.
The chairman of Prime Minister’s Economic Advisory Panel, C Rangarajan, said RBI has taken a “wise decision” and it would lead to softening of interest rate.
“The improvement in liquidity condition will automatically have effect on interest rate. Improvement in liquidity condition will lead to softening of interest rate,” he said.
According to Barclays Capital, the monetary policy is gearing more towards supporting growth despite continued upside inflation risks. "We continue to see risks of a repo rate cut of 25bps in the March mid quarter policy review, while maintaining our base case of start of the rate cut cycle from the April credit policy review. Even with the cut in the CRR, the RBI has flagged that non-food manufacturing inflation remains elevated, and has not seen sufficient softening to justify policy rate reductions as of now," it said in a report.
The RBI has commenced easing cycle with the 50bps cut in CRR. However the monetary policy has put the onus of easing on fiscal and structural policy. Rohini Malkani, economist, Citi India, said, "Given that the growth-inflation balance has shifted to growth, we maintain our view of a minimum 100bps cut in the repo rate in 2012. However, it is worth noting that the RBI has said the timing and quantum would be contingent on policy measures to induce investments and steps towards fiscal consolidation".
The BSE benchmark Sensex rallied by over 186 points in late morning trade soon after RBI announced a cut in cash reserve ratio (CRR) in its monetary policy review.
After rising over 83 points in early trade, the 30-share index rallied further to trade 285 points, or over 1.7% higher, at 17,037.11 at 1323 hrs.
The broad-based National Stock Exchange index Nifty regained 5,100-point level by rising 90 points, or 1.8%, to 5,136.75.
Ever since the germ theory came into existence mankind has been under attack by all kinds of reductionist chemicals to kill those germs inside us. The war against germs, far from being won has just begun—thanks to antibiotics!
“The physician should not treat the disease but the patient who is suffering from it”— Maimonides
This is the normal paradigm that medical students are taught, researchers are after and the industry is keen on. Both Lewis Pasteur and Paul Ehrlich did warn us that the “soil is more important than the seed”! History tells us that our effort to kill the germs in exclusion of the soil (human immune system) will not only be not successful in the long run but could be dangerously counter-productive. Ever since the germ theory came into existence mankind has been under attack by all kinds of reductionist chemicals to kill those germs inside us. Common man also gets carried away by such news. Discovery of penicillin would end the war against germs were headlines those days. If one were to audit the scenario today, penicillin and its other friends have brought forth a host of superbugs whom we do not know how to kill! The war against germs, far from being won has just begun—thanks to antibiotics! A committed researcher recently told me that he is bent upon finding a new drug to kill tuberculosis (TB) germs, which was his life’s ambition. I could understand his commitment as he had lost his dear mother to the disease.
Disease tuberculosis is not synonymous with mycobacterium tuberculosis! Killing that germ might or might not contain TB as a scourge. History tells us that anti-TB antibiotics have not really won the war. History repeats itself. If we do not learn from history we have to relive history and that is what we are doing. Long before anti-TB antibiotics were available, even before BCG was discovered death rate due to TB had come down in all countries where statistics were available mainly because of affluence and good nutrition. The book White Plague tells it all. Neils Ryberg Finsen, a Danish national, showed in 1903 that different colours in sunlight could cure skin TB for which he got the Nobel Prize for Medicine. He then started the Danish Institute of Light, the beginning of phototherapy. In modern medicine that might have been one of the early successes of energy medicine. That stimulated research on the Sanatoria treatment for TB. Now science tells us that the sunlight stimulates the vitamin D3 receptors which are at the bottom of our immune system stimulation. We come back to our theory that Mr Finsen’s success is also due to immune boosting capacity of sunlight.
In the mid1950s Government of India invited Professor JR Bignall, the then editor of Journal Tubercle and the leading light of TB research in the UK, to study TB in India. He surveyed the scenario for nearly a month throughout the length and breadth of the country and submitted a report which, in essence, said that the government should not import any anti-TB drugs which were in short and intermittent supply those days; instead should concentrate on improving the immune system of its poor masses. The scientific logic was that according to his estimate there were 2,50,000 sputum positive TB patients in India those days, of which half of them roughly would die of the disease as they were in advanced stage, thereby killing their germs. The remaining lot will recover with good nutrition and immune boosters killing the germs in the process. So at the end of the decade Mr Bignall postulated that India could be free from TB unless India allows TB patients to migrate from outside!
The government was under the grip of the industry and ignored the sane advice of one of the best brains in that field at that time. The country today is paying a very heavy price for that fatal mistake of the government in that intermittent and haphazard drug supply and incomplete treatment schedules resulted in India being one of the leading countries to have unusually high incidence of primary resistant TB in the world. No drug, even the one my friend thinks he will discover will help these hapless patients. They are all doomed. None of us is absolutely safe either as the super bug is in the air now! Our saviour is not the anti-TB drug but our immune system.
A cursory look at the advanced West will convince anyone that the fight against germ induced diseases is not in getting newer antibiotics, which are doomed to fail for obvious reasons as germs mutate daily to get over their foes, but in boosting the human immune system which will not only keep us alive from germs but from many other ills plaguing mankind today including the so called doctors-think-you-have-a-disease syndromes, otherwise called lifestyle diseases. The West was happy that they had conquered TB thanks to drugs. In fact, they could do that because of their affluence and better nutrition. However, now that they are hit by AIDS which saps the immune system completely; TB has raised its ugly head so badly that they have an epidemic of TB there! What was the change? The immune system depression invited any germ, not only TB, to invade our bodies. Even cancer is becoming an epidemic in AIDS patients.
Another researcher friend of mine was telling me that the government funding agencies are keen to pump in hundreds of crores for drug research in this area and he was very proud of his expertise in the field! It made me so sad that people, both in the funding agencies and in the research community, have not understood this enigma called the human body. We should remember that germs are our friends and they live with us for mutual benefit. We have trillions of germ genes incorporated into the Human Meta-genome where real human genes are just 25,000. What we are and what we do depends to a large extent on germs.
The above researcher made a vital statement during our discussion: “We all have TB germs and any day they might attack us; therefore we must have a new drug ready soon!” What a prophetic (mis)statement? Yes, we all have TB germs inside but only, and only when our immune guard falls down do we get the disease! So the need of the hour is research on how to keep the human immune guard strong.
|The same holds good for cancer research. While we are lost in looking for poisonous chemotherapeutics to treat cancers, we are at the same time pumping in thousands of cancer producing chemicals into human beings. Cord blood from a new born baby in the US recently showed nearly 257 banned chemicals; mainly fertilizers and other industrial chemicals! They are all potential carcinogens which will depress the immune system to help cancers to grow. An article in an English daily talks about the thousands of poor children are being killed in India due to surreptitious drug trials carried on by western drug companies (CROs) with the help of doctors in India. Even new vaccines are tried on poor Adivasi children where many have died before they found out that the vaccine is dangerous! Even Bill Gates’ name appears in that publication. Much talked about medical ethics have been thrown to the winds. I am sure the government has permitted them to do CRO research in India. (http://www.independent.co.uk/news/world/asia/without-consent-how-drugs-companies-exploit-indian-guinea-pigs-6261919.html)|
May I humbly request researchers not just to look at human illnesses and wellness through a reductionist (today vivisectionist) tinted glasses? Look at the whole drama and you will soon realise that we have been barking up the wrong tree in that area. That has brought untold misery to human beings in the name of research. The infamous search for a new anti-TB molecule falls into that group. Newer developments in quantum physics tell us that the human body is but a bundle of jumping leptons and every cell, of which there are more than fifty trillion in all, have their own minds. Even if we apply an ointment to the palm of our hand the leptons and cells even in the brain change after getting that message, thanks to Fritz Albert Popp’s bio-photon camera. The emergence of the new epidemic of TB needs a holistic approach where the immune stimulation plays the key role. Drugs are just a temporary quick-fix of secondary importance.
“Doctors give drugs of which they know little, into bodies, of which they know less, for diseases of which they know nothing at all”— Voltaire
(Professor Dr BM Hegde, a Padma Bhushan awardee in 2010, is an MD, PhD, FRCP (London, Edinburgh, Glasgow & Dublin), FACC and FAMS. He is also the editor-in-chief of the Journal of the Science of Healing Outcomes, chairman of the State Health Society's Expert Committee, Govt of Bihar, Patna. He is former vice-chancellor of Manipal University at Mangalore and former professor for cardiology of the Middlesex Hospital Medical School, University of London. Prof Dr Hegde can be contacted at [email protected])
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