RBI keeping watch on inflation, to take step if necessary: FM

New Delhi: Finance minister Pranab Mukherjee today said the Reserve Bank of India (RBI) is keeping a watch on demand factors that fuel inflation and it will make adjustments, if necessary, reports PTI.

"It (RBI) is keeping a watch on the demand side and if it is found that demand side needs to be taken care of and if it is necessary then adjustments will have to be made," Mr Mukherjee said in his reply to a debate on inflation in the Rajya Sabha.

He said RBI is framing its monetary stance in coherence with the Centre's fiscal policies.

"RBI has assured that it does not want to frame monetary policy which is discordant with fiscal policy. That is why, it is making changes in doses," the finance minister said.

He appreciated the RBI's role in smooth conduct of the government's huge borrowing plan, which did not leave resources dry for the private sector.

The government is slated to borrow over Rs4.5 lakh crore from markets this fiscal.

In order to control high inflation, RBI in its monetary review on 27th July raised short-term borrowing (reverse repo) rate by 50 basis points and lending (repo) rate by 25 basis points.

It, however, kept cash reserve ratio, a requirement for banks to keep portion of their deposits with the central bank in cash, unchanged due to difficult liquidity position in the markets.

The liquidity was hit due to over Rs1 lakh crore outgo to the government for payment of third generation (3G) and broadband wireless access spectrum by telecom companies.


Corporate bond trading volume soars 17% in July

Volumes climb to Rs63,782.46 crore in July compared to Rs54,404 crore in June; further upward momentum expected due to increased FII activity

According to data released by the Securities and Exchange Board of India (SEBI), corporate bond trading volumes have climbed 17% at Rs63,782.46 crore in July 2010 compared to Rs54,404 crore the month before. There were 4,446 combined trades on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and The Fixed Income Money Market and Derivatives Association of India (FIMMDA) platforms.

Total trading volumes between April-July 2010 now stand at Rs2.57 lakh crore. Private placement of bonds soared 33% in the first quarter of FY11 backed by fears of rate hikes by the Reserve Bank of India (RBI) to curtail inflation. The data for private placement of bonds for July is not available on the SEBI website yet.
Industry players feel that the volumes are likely to see continued upward momentum in the days ahead.

"There has been good Foreign Institutional Investor (FII) inflow this month in debt. Yield rates have been slightly volatile since the market has moved on both sides. Foreign banks have started building positions in corporate bond markets. It will be a regular trend that you will see from now on," said Arvind Chari, senior fund manager, Fixed Income, Quantum Mutual Fund. Net FII investments in debt stood at Rs740 crore in June.

"Usually, at the beginning of the quarter, you see many mutual funds and banks buying certificates of deposit (CDs)," said Ganti N Murthy, head-fixed income, Peerless Mutual Fund.

During the first quarter of this fiscal, companies raised as much as Rs61,344 crore via corporate bonds, up 33% from the Rs46,287 crore raised during the same period last year.

Market regulator SEBI recently allowed 14 FIIs to invest up to Rs2,000 crore in corporate bonds.


GIS to be used for monitoring NREGA

New Delhi: The Centre will now monitor the implementation of the National Rural Employment Guarantee Act (NREGA) through Geographical Information System (GIS), reports PTI.

The ministry of rural development has constituted an expert group for developing a "strategic framework" with respect to the use of GIS under Mahatma Gandhi National Rural Employment Guarantee Act, a ministry official said today.

The 16-member expert group will be headed by secretary in the rural development ministry, B K Sinha. A representative from the Indian Space Research Organisation (ISRO) will also be the part of the group.

"The initiative aims at strengthening decentralised participatory planning process, implementation, monitoring and evaluation of works under Mahatma Gandhi NREGA by using GIS and Geo-ICT tools," the official said.

The group will commission studies of ongoing use of GIS in states and suggest a strategy for effective implementation of Geo-ICT tools with specific reference to planning, implementation and monitoring works under NREGA, he said.

The group will determine region-wise appropriate models keeping in mind the different geographical condition of various states and regions.

An appropriate methodology for collection, collation, storage and processing of data on natural resources in a given region will be developed.

"The expert group will formulate strategy and develop a working model for its nationwide roll out," the official said.

The use of GIS will not only help in monitoring the implementation of NREGA but managing the assets being created under the flagship programme, he said.

NREGA permits works relating to water conservation and harvesting, drought proofing which includes afforestation and plantation, flood protection and drainage works and road construction in rural areas apart from canal and other minor and micro-irrigation works, horticulture plantation and land development works.

"The use of GIS will help capture existing assets (created under NREGA) with their location, status and other information on the basis of which periodic assessment can be done and policy for their management can be developed," the official added.


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