........Will the government be able to deliver on the 5.1 percent of GDP...and even if they deliver, what will be the quality of adjustment? how much by taxing, how much by expenditure compression? The government must also reduce expenditure, not raise taxes alone in order to make fiscal consolidation sustainable," ........
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Wednesday, June 20, 2012
RBI lets everybody down
...........The dharma of the central bank in a developing economy is to worry about both growth and inflation; in a developed economy about both jobs and inflation. Much of the continuing misery in the world today stems from ignoring half the mandate.
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RBI does not allow itself to be browbeaten by short-term interests
RBI governor D Subbarao has stood firm in the face of incessant demands not only from vested interests in industry but, more importantly, from his de-facto bosses in the finance ministry, and restored faith in an essential prerequisite of a vibrant democracy: independent institutions.............
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Goalposts shifted, RBI scores self-goals
......Subbarao’s tenure isn’t much better than Rangarajan’s, and perhaps is much worse. Inflation in 2011 was the same as in 2009, and unlike the prior decade, domestic inflation is about 5 percentage points per year higher than comparator inflation. This persistently and abnormally high inflation has little to do with monetary policy and everything to do with the populist agricultural policies of the kulak-oriented UPA, led by socialist supremo Sonia Gandhi and the National Advisory Council. So one cannot, and should not, blame the RBI for the high food inflation induced by high procurement prices given to the rich kulaks of India (in the UPA’s prose, the aam farmers). But one should blame the RBI for being naively quixotic in its pursuit of reducing administered price inflation by killing the economy.........
RBI warns the government...but disappoints markets
This refers to the edit “Inadequate response” (June 19). It may not be fair to criticise the Reserve Bank of India (RBI) for keeping policy rates steady. It would have been very difficult for it to affect reductions purely on the basis of core inflation figures when the headline inflation, which affects the common man more, is refusing to come down from double-digit numbers. Besides, growth-stimulating investment in the context of high inflation needs well-coordinated fiscal and monetary measures. While reducing policy rates in the last quarter, RBI had cautioned the government about this and expected it to take steps for fiscal consolidation and removal of supply side constraints. But the government affected a half-hearted, inadequate increase in petrol prices, leaving diesel price untouched. How long can RBI carry the burden of managing the balance between growth and inflation with the government showing no political courage to bring down heavy subsidies, liberate restrictions on foreign investments and remove curbs on access to resources like land and minerals. By taking this bold step, RBI has given a sound warning to the new finance minister and the government to discharge their part of responsibility.
- Y G Chouksey Pune
...but disappoints markets
The government’s failure to address supply side constraints is the reason for the high level of inflation. In the absence of a credible policy initiative from the government, the Reserve Bank of India has clearly indicated that monetary policy tools alone will not be sufficient to control inflation and prop up growth. Of course, it is up to the government to initiate policy prescriptions, but RBI could still have cut policy rates by at least 25 basis points to boost market sentiments. Indeed the industry bodies are disappointed.
- Srinivasan Umashankar Nagpur (BS)
Reforms deficit
This refers to the editorial ‘Missing a ‘rate’ trick (Business Line, June 19) During its mid-quarter review, the RBI has done a good job in enhancing the limit of export credit refinance (ECR) from 15 per cent to 50 per cent, which will increase the credit flow to the export sector. It has managed to keep the deposit rate steady which will also help the people, especially senior citizens, to get higher interest against their hard earned money deposited in banks. The RBI asked the central government to control the fiscal deficit, which the government has failed to do. The government has also failed to carry forward economic reforms such as FDI in multi brand retail, decontrol of urea and petro-product prices, pension reforms and the Insurance Bill.
- Jayant Mukherjee Kolkata (HBL)
Can’t outsource to RBI
.....But that said, what are we to make of the policy? Rate cuts cannot, as RBI argues, raise GDP growth if the problems are structural or if there is, to use the common catchall phrase, ‘policy paralysis’. But rate hikes make viable projects unviable by lowering project IRRs and, by the same logic, rate cuts make them viable........
Inflation jinx
The Reserve Bank of India's decision to hold interest rates steady in its midterm policy review has disappointed both industry and markets. A cut in rates, they argue, would boost investments and growth. But the RBI is right in taking a contrarian view...............
Status quo on policy rates, a right move - T. V. Gopalakrishnan
Kudos to the RBI for a bold mid-quarter monetary policy review, defying the expectations of the market and without yielding to the pressures of the Finance Minister to reduce the rates. The Reserve Bank has taken a series of measures in the past few years to contain inflation and provide adequate credit for growth. But, unfortunately, neither growth nor price stability could be achieved to the desired extent..............
RBI decision on rates after taking everything in account: Cong
...... "RBI is an independent regulatory authority. If they have taken a certain decision, they must have taken everything into account...If there is a crisis in the Eurozone, it does have its implications for the Indian economy,"...........
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Banks to open SME branches in industrial areas of Uttarakhand
There is good news for the MSME sector in Uttarakhand. The State Bank of India (SBI), India’s largest bank, will open an MSME branch at the Selaqui industrial area, near here. Besides, a financial institution hub is also on the cards, with the Uttarakhand government stating that it can be set up at the Sahastradhara Information Technology Park, where the Reserve Bank of India, Small Industries Development Bank of India (Sidbi), National Bank for Agriculture and Rural Development (Nabard) and other public sector banks (PSBs) can open their regional offices..........
Despite HC orders, Nagpur District Central Cooperative Bank scam case stuck for 10 yrs
.........Currently Reserve Bank of India (RBI) has issued orders restricting the NDCCB from accepting fresh deposits. A district central cooperative bank (DCCB) is a key source of agriculture finance, the ban on deposits has severely hampered its operations. Incidentally, once again a panel backed by Kedar is in power at NDCCB. The scam has taken its toll the Wardha and Osmanabad district central cooperative banks too. Funds of these banks are alleged to have been remitted to Home Trade through Kedar.
Why get emotional on forex rate?
MUMBAI: RBI Governor D Subbarao, who addressed businessmen at the Indian Merchant's Chamber on Tuesday, stressed on the need for joint efforts to ensure growth. "I don't think this blame game can go on. All of us...you (businessmen), the RBI and the government have to look for solutions and not give in to a sense of despondency," ................
RBI extends 2 pc interest subsidy scheme for exporters
The Reserve Bank today extended the 2 per cent interest subsidy scheme by another year on rupee export credit to the labour-oriented and small scale sectors to cushion them from slowdown in markets like the US and Europe..................
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35% population of Haryana not covered under financial inclusion
CHANDIGARH: Around 35 % population of Haryana is still to be covered under the financial inclusion plan, said K Sayeed Ali, chief general manager of NABARD's state regional office on Tuesday.........
................Ali referred to Dr. Rangarajan Committee report which had stressed for the need for complete Financial Inclusion by bringing the excluded population who are presently deprived of financial services into the banking net. ....................
District Bank personnel to disburse crop loans for lead bank
MUMBAI: Nationalised Banks can utilise the services of District Co-operative Banks to disburse crop loans, said Harshvardhan Patil, Maharashtra's co-operatives minister. The decision follows notices issued by the Reserve Bank of India to six district Credit Co-operative Banks to stop accepting any more deposits as their performance was not upto the mark. ...........
Cornered non-banking finance companies delve into soul-searching
....."RBI is taking a very critical look at gold loan NBFCs in the last few years by bringing in regulations like the loan-to-value cap of 60% on gold loans. It has also set up the K U B Rao Committee to study various issues in the gold loan business and we expect the committee to file its report in two or three months. When the report comes out, we will incorporate those recommendations into the SRO," ......
RBI advice to assessees
Thiruvananthapuram, June 19: The regional office of the Reserve Bank of India has advised assessees to remit income tax sufficiently in advance of the due date. The appeal is being issued in their own interests so that last-minute rush and related inconvenience may be avoided, an official spokesman said here. It has been observed that the rush for remitting income-tax dues into the Reserve Bank has been far too heavy towards the end of June. It becomes difficult for the bank to cope with the pressure of receipts although additional counters to the maximum extent possible are provided for the purpose.
HL
RBI looking into record high gold imports
The sharp rise in gold imports has drawn the central bank’s attention and it is studying the factors contributing to this. Reserve Bank of India (RBI) Governor D Subbarao on Tuesday said they were looking into the reasons. “We are trying to solve why gold imports were at a record high,” he said..............
Odisha's Urban Co-op Bank set to merge with Cosmos Bank
The Odisha government has given its nod for merger of the loss-making Urban Co-operative Bank with Pune-based Cosmos Co-operative Bank, official sources said. Commenting on this state's Chief Secretary B K Patnaik said, "The merger of the two banks will be completed in three to four months and will help to protect deposits of about 13,000 investors.”...........
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