“The inflation and interest rate cycles have peaked and have to come down and for that the RBI will look at events like the Budget (2012-13), international crude oil prices and other variable factors to calibrate its policies,” RBI governor D Subbarao said on Friday
Patna, Feb 17 (PTI) The Reserve Bank of India (RBI) on Friday said interest rates have peaked and indicated that it would reduce them after taking into account the Budget proposals and global commodity prices, reports PTI.
“The inflation and interest rate cycles have peaked and have to come down and for that the RBI will look at events like the Budget (2012-13), international crude oil prices and other variable factors to calibrate its policies,” RBI governor D Subbarao said here yesterday.
Finance minister Pranab Mukherjee will present the Budget for 2012-13 fiscal in the Lok Sabha on 16th March during which he is expected to announce steps to arrest slowdown in economic growth.
The gross domestic product (GDP) growth rate in 2011-12 is expected to moderate to 6.9% from 8.4% a year ago.
Defending RBI’s decision to hike interest rates (repo) 13 times since March 2010, Mr Subbarao said the measures were required to tame inflation which had significantly crossed the threshold levels.
The RBI governor said growth had to be sacrificed to bring down inflation. Overall inflation in January stood at 6.55%.
On the overall health of the financial system, Mr Subbarao said it is sound and prudently regulated to weather the impact of global economic crisis despite the fact that “our economy is more globalised than we tend to acknowledge”.
“However, it was due to sound and prudent monetary policy of the RBI that our country was by and large saved from the blues of global economic crisis and the savings of our people stood protected in contrast to their counterparts in the US and other Western countries,” he said.
The RBI governor further said that the central bank has unlocked liquidity with a view to sustain growth. In its third quarter policy review last month, the RBI had lowered the cash reserve ratio by 0.50 percentage points to 5.5%, releasing Rs32,000 crore worth primary liquidity into the system.
The apex bank, however, did not reduce interest rates ignoring the advice of some of the members of its Technical Advisory Committee (TAC).
Tata Group chairman Ratan Tata, who filed an affidavit before the apex court, said the government and its agencies had failed to protect the secrecy of the tapped conversations and an independent probe was required as the wire tap was done at a “fairly high level” in government departments
New Delhi: Tata Group chairman Ratan Tata has sought a probe by a ‘skilled’ independent agency into the leakage of controversial tapes containing conversations of corporate lobbyist Niira Radia with him and others, saying the probe conducted so far “hardly inspires public confidence”, reports PTI.
Mr Tata, who filed an affidavit before the apex court, said the government and its agencies had failed to protect the secrecy of the tapped conversations and an independent probe was required as the wire tap was done at a “fairly high level” in government departments.
“On this account (leakage of tapes), the department, which conducted the wire tap, has been under the scrutiny.
Since this is all done at a fairly high level within the departments, for any inquiry to be fair and transparent, it would have to be by done by an outside agency skilled in making investigations —this has not been done,” Mr Tata said in his affidavit.
“The petitioner (Tata) submits that the unauthorised disclosure of the intercepted material is in blatant violation of the provisions of the Official Secrets Act, 1923, whether intercepted by the government directing or by a service provider as its agent.
“The data collected and information contained therein is the property of the government and it is submitted that any unauthorised disclosure thereof constitutes violation of Section 5 (wrongful communication of information) of the Official Secrets Act,” the affidavit stated.
Mr Tata also sought a copy of the government’s probe report, submitted before the bench in a sealed cover, saying the government is duty-bound to supply a copy to him.
“I am advised to state that any material placed before the court to deny the assertion that there has been violation of such a right by the agencies of the Union can only be so placed after it is made available to the petitioner.”
The Centre had filed the report in a sealed envelope before the bench on 31st January.
It had said the tapes broadcast by the media had been tampered with and government agencies were not responsible for its leakage.
The government had said there were eight to ten agencies, including service providers, involved in tapping of telephonic conversation of Ms Radia.
The report said the starting and the end point of the conversations do not match with the original tapes, justice Singhvi had said referring to the report.
He had said the report also stated that officers, who had conducted the probe, did not know who had leaked it.
In 2010, the government, while maintaining that the issues raised by Ratan Tata in his petition relating to the Radia tapes leak requiring a probe, had turned down his plea for taking steps to stop publication of the leaked transcripts in the media.
In February last year, the government had submitted to the apex court a copy of a complaint on the basis of which it had begun tapping Ms Radia’s telephonic conversations with several people including politicians, corporate leaders and media persons.
The complaint was given to the court in compliance with its 13 December 2010, order which was passed on Mr Tata's plea for a probe into the leakage of tapes containing his private conversations with Ms Radia and for stopping its further publication.
The government had told the court that it had begun tapping Ms Radia’s telephone on a complaint alleging she was indulging in anti-national activities and was acting as spy of foreign intelligence agencies.
The Centre had maintained that conversations were recorded as part of the surveillance ordered by the Directorate General of Income Tax (Investigation) following a complaint received by the finance minister on 16 November 2007, alleging that Ms Radia had within a span of nine years built up a business empire worth Rs300 crore.
The government had given details of as to how 180 days of Ms Radia’s conversations were recorded—first from 20 August 2008 onwards for 60 days and then from 19th October for another 60 days. Later on 11 May 2009, her phone was again put on surveillance for another 60 days following a fresh order given on 8th May.
Mr Tata had moved the apex court on 29 November 2010, seeking action against those involved in the leakage of the tapes alleging the leakage amounts to infringement of his fundamental right to life, which includes right to privacy under Article 21 of the Constitution.
Mr Tata had contended as Ms Radia’s phone was tapped for the purposes of alleged tax evasion, the tapes could not be used for any other purpose.
Mr Tata had argued making public his conversations with Ms Radia also violated his right to speech and expression under Article 19(1)(a) of the Constitution.
The petition had also asked the apex court to give a direction to the government and its probe agencies to ‘retrieve’ and ‘recover’ the leaked tapes.
In the wake of unearthing of the second generation (2G) spectrum allocation scam allegedly involving a loss of Rs1.76 lakh crore to the public exchequer, some journals had published Ms Radia’s taped conversations with politicians, journalists and industrialists.
Transcripts of some of these tapes had also come up on various websites, stirring a controversy over the alleged nexus between lobbyists and journalists.
“Some members of the TAC felt that the fiscal pressure would continue beyond 2011-12 as the monetary impact of entitlements such as Mahatma Gandhi National Rural Employment Guarantee Act and oil, fertiliser and food subsidies would be significant,” the minutes of the TAC released by the RBI revealed
Mumbai: A top Reserve Bank of India (RBI) advisory panel involved with the monetary policy had expressed concern that the decline in investment would impact the country’s economic growth in the next fiscal, reports PTI.
“Some (TAC) members felt that the slowdown in investment would affect the next year’s growth as well. Besides, it would also have implications for inflation, going forward,” minutes of a meeting of Technical Advisory Committee released by the RBI Friday said.
RBI will put out a formal projection on India's economic growth for 2012-13 in the Annual Policy Statement in April.
However, RBI’s baseline scenario is that the economy will exhibit a modest recovery next year, with growth being slightly higher than during this fiscal year.
India’s economic growth rate, as per government data, is likely to be 6.9% this fiscal, as against 8.4% in 2010-11.
The members of TAC headed by RBI governor D Subbarao, which met on 18th January ahead of the third quarter monetary policy, felt that the economy was clearly slowing down.
“While high interest rates had impacted investment, the overall investment sentiment was also subdued because of the structural and confidence issues that had not been addressed,” the RBI added.
Amid high interest rate regime, credit to industry increased by only 19.8% in December 2011 as compared to 31.6% in the same month of the previous year.
Inflation has started moderating but it is nowhere near the comfort zone of about 5%. TAC members expressed hope that inflation would moderate to around 7% by March-end.
They also expressed concern over the widening fiscal deficit and felt the government will “slip significantly” on the target of keeping it at 4.6% of the gross domestic product (GDP) in the current fiscal.
“Some members felt that the fiscal pressure would continue beyond 2011-12 as the monetary impact of entitlements such as Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) and oil, fertiliser and food subsidies would be significant,” the minutes revealed.
Concerns were also expressed over the high and widening current account deficit (CAD) due to slowdown in exports and inelastic imports.
“Given the fragility of the global situation and slowdown in capital flows, there was a need to remain extremely watchful insofar as the external sector was concerned,” they opined.
Exports grew only by 6.7% in December, year-on-year, while imports were up 19.8% during the period.