RBI rate hike is right move: Montek Singh Ahluwalia

“Keeping these (short-term) rates low would not help as the long-term interest rates would go up due to inflation” Planning Commission deputy chairman Montek Singh Ahluwalia said

New Delhi: Describing the Reserve Bank of India’s (RBI) decision to raise key interest rates as the ‘right move’, the Planning Commission today said the tight monetary policy will not hurt growth, which is projected at 8.25% to 8.5% for the current fiscal, reports PTI.

“I think it is certainly the right move (of RBI) to contain inflation. This is a widely expected move,” Planning Commission deputy chairman Montek Singh Ahluwalia told reporters here.

“I don't think it will impact economic growth. I have already said it would not be 9% this fiscal. It would be in the range of 8.25% to 8.5%, which is a reasonable thing to plan for,” he said.

Continuing with its efforts to contain inflation, the central bank raised key short-term lending and borrowing rates by 25 basis points each today for the 10th time since March 2010.

While the short-term lending (repo) rate has been raised to 7.5%, the short-term borrowing (reverse repo) rate has been hiked to 6.5%.

Inflation stood at over 9% in May, much above the central bank’s comfort level of 5%-6%.

On the concerns expressed by the RBI in its mid-quarter review over rising prices, Mr Ahluwalia said, “Inflation remains in the worrying area. Therefore, it is entirely right that both the monetary and fiscal policy should be supportive of containing inflation.”

About the impact of the RBI hiking short-term borrowing and lending rates on economic growth, with credit becoming dear for industry and other consumers, he said, “Keeping these (short term) rates low would not help as the long-term interest rates would go up due to inflation.”

Elaborating on the reasons for lowering the growth target from 9% this fiscal to 8.25%-8.50%, he said, “The reason for lowering economic (growth) projection is that farm output growth would not be as high this fiscal as 6.6%, which was recorded in 2010-11.”

The country registered an economic growth rate of 8.6% last fiscal mainly due to a smart recovery in farm output, which stood at 6.6%.

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Hindustan Zinc pays Rs200 crore advance tax in Q1

Hindustan Zinc attributed the increased tax outgo to “improved efficiency in operations and expansion in business”

Hindustan Zinc said it has paid Rs200 crore as the first advance tax instalment for the April-June quarter of the current fiscal, double than the amount it had paid in the same period last year.

The Vedanta Group company, in a statement, attributed the increased tax outgo to “improved efficiency in operations and expansion in business”.

The company further said that it produced 9,64,000 tonne of zinc-lead in 2011 and plans to commission 1 lakh tonne lead smelter capacity this year.

Besides this, the Anil Agarwal-promoted company is also aiming to produce 500 tonne of silver by March 2012, following the expansion of its Sindesar Khurd mine, a silver rich mine in Rajasthan, the statement said.

Simultaneously, Hindustan Zinc is also aiming to generate 275 MW of wind power by September this year as part of its green energy initiative, the statement further said, adding that the wind farms are being commissioned in Rajasthan, Gujarat, Tamil Nadu, Maharashtra and Karnataka.

On Thursday, Hindustan Zinc ended 0.82% down at Rs132.60 on the Bombay Stock Exchange, while the benchmark Sensex ended 0.81% down at 17,985.88.

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Lanco Infra to invest Rs35,000 crore in thermal power plant

Lanco Infratech plans to have a power generation capacity of 15,000 MW by 2015

Lanco Infratech said it would invest Rs35,000 crore for setting up thermal power plants in the country and may partly raise the amount by hiving off its power business.

“We will definitely make power a separate entity... May be in the next two years,” executive chairman Lanco Infratech L Madhusudan Rao told reporters while unveiling the group’s new logo.

Lanco Infratech plans to have a power generation capacity of 15,000 MW by 2015 for which it requires investment to the tune of Rs35,000 crore. The current installed capacity of the company is 3,300 MW.

“About 9,300 MW projects are under operation and under advance stages of construction and work would also commence on the remaining 6,000 MW in the next 3-4 months as the funds would be tied up by that time,” Rao said.

The company is in talks with various banks and financial institutions for funding the debt portion of the Rs35,000 crore investment. The project would be funded at a debt and equity ratio of 80:20.

Lanco Infratech, which is currently sourcing the power equipment from China, is open to the idea of manufacturing it on its own.

“We are looking at it, but right now it is too early to comment,” Rao said.

The company is spreading its operations overseas and is hopeful of winning power projects in Bangladesh, Indonesia and in the Middle-East.

“We have qualified for projects in Bangladesh, Indonesia and in the Middle-East...They are yet to be finalised,” he said.

Lanco Infratech, which acquired Griffin coal mine in Australia, is now focusing upon acquisition of more coal assets in Indonesia, South Africa, Australia and India.

“Right now we have sufficient coal reserves to fulfil our demand,” he added.

On Thursday, Lanco Infratech ended 0.16% down at Rs30.45 on the Bombay Stock Exchange, while the benchmark Sensex ended 0.81% down at 17,985.88.

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