RBI cuts rate further - will economy be boosted??

The Reserve Bank of India on Friday cut key policy rates. The repo and the reserve repo rate under the liquidity adjustment facility RBI has been cut by 100 basis points while cash reserve ratio (CRR) has been reduced by 50 bps.

Following this move, reverse repo stands at 4%, repo stands at 5.5% and CRR now stands at 5%. The cut in CRR will infuse Rs 20,000 crore in the system.

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The market had widely expected RBI to cut the key lending rates. The cut in repo and reserve repo is with immediate effect while CRR cut will be effective from fortnight beginning January 17. Since August RBI cut CRR by 450 basis.

Repo rate is the rate at which banks borrow from RBI while the reverse repo is the rate which RBI gives banks for parking their surplus funds. These two rates are seen as the floor and the cap for daily call money movement.

The decisions would among other things infuse Rs 20,000 crore into the banking system.

Both reductions are effective immediately. The repo rate has been cut aggressively since mid-October last year as the central bank tried to minimise the knock-on effects of the global financial crisis.

Also Read :
-Effect of Recession on Indian Economy
-Economies hit by recession
-Plan for World Economy Revival
-Indian Economic Summit Updates
-Rs v/s US$ latest updates
-World's Strongest economies list
-Trouble in Indian Forex
-Indian Agricultural Updates
-US Economic recession-how it started

posted under - RBI updates, effect of recession on india, indian economy, economy of india, india economy updates, Reserve bank of india, Indian economy updates, indian rupee updates

US $ v/s rs daily updates - January 2009

Indian economy trends are very important for those who are into economic analysis in India, Indian National rupee popularly known as INR in international market is following a downward trend due to global financial turbulance. As volume of US dollars (USD) in international markets is on a decline so the value of US $ is growing up, well indian IT industrycan feel better to some extent and is the only industry which would be getting a plus from current market scenario.

The post would include (US$ v/$ rupee) daily trends the rate shown of Indian rupee would be as displayed at time of stock markets closure(mainly BSE and NSE) you can also see daily Stock market live rates and closing rates.

INR(Indian National rupee) v/s US$ November trends/updates are as follows:

format for display of rs v/s $ would be in following order:

(date | RS v/s $ rate Daily trends updates | Remarks with respect to US $)


28/1/2009 | 48.85 | Up^0.34 | Rupee (INR) grew stronger by 34 paise wrto US $

22/1/2009 | 48.56 | - | Rupee (INR) fell weaker by - paise wrto US $

21/1/2009 | 48.56 | Down(0.00) | Rupee (INR) fell weaker by - paise wrto US $

20/1/2009 | 48.56 | Up^0.21 | Rupee (INR) grew stronger by 21 paise wrto US $

19/1/2009 | 48.77 | Up^0.31 | Rupee (INR) grew stronger by 38 paise wrto US $

16/1/2009 | 49.08 | Down(0.38) | Rupee (INR) fell weaker by 38 paise wrto US $

15/1/2009 | 48.70 | Up^0.10 | Rupee (INR) grew stronger by 10 paise wrto US $

9/1/2009 | 48.61 | Up^0.07 | Rupee (INR) grew stronger by 7 paise wrto US $

7/1/2009 | 48.68 | Down(0.31) | Rupee (INR) fell weaker by 31 paise wrto US $

2/1/2009 | 48.73 | Down(0.23) | Rupee (INR) fell weaker by 23 paise wrto US $

1/1/2009 | 48.50 | Up^0.05 | Rupee (INR) grew stronger by 5 paise wrto US $

Indian Govt Fiscal Deficit Increases

The Economy of India's fiscal deficit for year 2008-09 has increased when compared to previous year, following statistics show the grim picture of economy which is in high deficit. It is to mention that i had already predicted the fiscal deficit to rise in one of my previous post.

The difference between total receipts and expenditure is Rs 1,76,510 crore up to November 2008 in the current financial year.

This year the government is spending more than originally budgeted on social sector, subsidies and infrastructure development.

Policy makers believe that the rising fiscal deficit is not a matter of concern. Suresh Tendulkar, Chairman ,Prime Minister's Economic Advisory Council said," Private investment activity is very low as of now.So there is no question of fiscal deficit crowding out private investment activity and fiscal deficit need not be looked at as a major concern."

Home minister P Chidambaram already indicated that the government may require one more year to eliminate revenue deficit and reduce fiscal deficit below 3% as required by the Fiscal Responsibility and Budgetary Management Act."This is not a year to worry about fiscal deficit," the minister said.

The revenue deficit continued to surpass estimates for the whole year by 256.2%. It stood at Rs 1,41,364 during April-November 2008 as against Rs 55,184 for the entire fiscal. It may be pointed that a substantial part of the government's spending takes place in the first half of the fiscal.

The center's revenue stood at Rs 3,14,974 crore during first eight months accounting for 52.2% of estimated figure for the entire year against 56.5% a year ago. Most of the revenue came from taxes at Rs 2,53,558 crore. Expenditure stood at Rs 4,94,124 crore, constituting 65.8% of what is pegged for the entire year , up from 60.5% in a year ago period. Much of the expenditure comes under the non-plan head at Rs 3,57,994 crore constituting 70.5% of estimated figure for the year. Plan expenditure stood at Rs 1,36,160 crore ,which represents 55.9% of Rs 2,43,386 crore budgeted for the year.

Indian economy growth predicted at 6 - 7% for next year

Kotak Securities have predicted indian economic growth between 6-7% for year 2009 the reason told is: "The global turmoil has had an impact on the Indian economy
due to the resultant liquidity crunch and fall in demand. This will have an impact on the growth of the corporate sector and this impact may continue in the foreseeable future," Kotak Securities' managing director S A Narayan said.

"We see BSE Sensex moving in the range of 9000 – 12000. Further uptrend can be expected only after further visibility emerges on the global economic growth and the extent of the impact on India," said Mr Narayan, adding, "select stocks in the pharmaceuticals, PSU banks, power, construction and capital goods sectors are expected to perform well.

Large players in infrastructure sector less dependent on raising fresh capital from market will outperform," he added. In a technical outlook report put out by Ambit Capital, the brokerage expects Nifty to start its upmove once consolidation gets completed in the first months of 2009. Ambit Capital has given short-term target of 3800 on the Nifty.

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-Effect of Recession on Indian economy

"Over a medium-term horizon, Nifty looks positive. As per the Elliot Wave Counts, Nifty has completed the price-wise correction and going forward, one can expect time-wise correction. However, in that process also, we expect Nifty to inch upward," the technical outlook report said.

published under - economy of india, dwindling indian economy, India Economy, india economy updates, Indian Economy, india economy updates

Economy requires further monetary action - MS Ahluwalia

The deputy chairman of planning commission, Montek Singh Ahluwalia has indicated further changes in the monetary policy as part of
second stimulus package.

"With economy growing below potential and inflation on its way down, there is a scope for further monetary action," Montek Singh Ahluwalia told reporters at the planning commission.

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-Trouble in Indian Forex
-Indian Agricultural Updates
-Effect of Recession on Indian economy

Mr Ahluwalia further added that further increasing expenditures may not be a thrust area for the government. "The world economy is expected to get worse next year. We have proposed a stimulus package for this year and next year. Barring this,
we are not proposing any new expenditure for this fiscal."

The second stimulus package is likely to come out in next few days. However, when asked about the date on which the package would be announced, Mr. Ahluwalia declined to specify any particular date but said that the government was continuously watching the situation and it would not hesitate to take any further steps.


source - www.economictimes.com

Scope for further rate cuts - MS Ahluwalia

With the inflation rate almost halving from the peak levels in August and economic growth slackening, Planning Commission Deputy
Chairman Montek Singh Ahluwalia on Monday said that there is further scope for the RBI to cut lending rates.

"It is clear at the moment that the economy is growing below its potential and inflation is definitely on its way down. And these factors would suggest that there is a scope (for easing monetary policy)," Ahluwalia told reporters here.

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-World's Strongest economies list
-Trouble in Indian Forex
-Indian Agricultural Updates
-Effect of Recession on Indian economy

RBI Governor D Subbarao today met Prime Minister Manmohan Singh at his residence, adding to the speculation that RBI might signal further cut in interest rates to boost economic growth which is impacted by the global crisis.

The apex bank had already injected Rs 3,00,000 crore into the system slashing the policy and reserve ratio rates to inject funds into the cash strapped economy.

Responding to the steps taken by the RBI, several banks including the largest lender SBI have cut lending and borrowing rates.

State-owned banks like the Punjab National Bank, Bank of Baroda and Dena Bank today reduced their benchmark lending rates by up to 75 basis points.

The Government, in its Mid-year review of the economy presented in Parliament recently said there was considerable scope for monetary policy easing over the next 6-12 months to offset the global increase in demand for money that is being transmitted to India.

What others are reading now:
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-Rs v/s US$ latest updates
-World's Strongest economies list
-Trouble in Indian Forex
-Indian Agricultural Updates
-Effect of Recession on Indian economy

Ahluwalia said, "We should be watching the situation carefully and we should not hesitate to take further steps. These matters are being discussed...our prospects for inflation justify taking a stronger monetary position."

Inflation which had peaked to 12.91 per cent in August came down to 6.61 per cent in December.

posted under - India Economy, economy of india, indian economy updates, Indian policy updates, economy of india, rising indian economy, 24th indian economic summit, deflation in world economy, econoy of india, growing india economy.
-source - www.economictimes.com