New Delhi: The chances of the RBI signalling higher interest rates in its April policy review grew stronger with finance minister Pranab Mukherjee on Tuesday saying double-digit inflation was a matter of concern. He, however, said it was not beyond control and a 9-10% economic growth rate was still achievable. “We shall have to move towards betterment, towards development and 9-10% growth is achievable. It is not a pipedream,’’ he said, winding up the discussion on the Budget in the Rajya Sabha. But he said it was important to control inflation to ensure that it did not eat into the benefits of growth. “Benefit of growth is necessary, price control is necessary, fiscal consolidation is necessary,’’ Mukherjee said, adding that double-digit inflation was not new. He pointed out that in 1980, when Indira Gandhi came to power, inflation was 20% and in 1991, when Manmohan Singh became finance minister, it was 16%. On Monday, data had pegged the overall inflation at a 16-month high of 9.89% for February. *
FM defends duty hikes on petro products * New Delhi: Finance minister Pranab Mukherjee’s statement on Tuesday, outlining the government’s inflation worry, is being seen as the strongest hint yet to the RBI to tighten purse-strings further. Mukherjee, however, told the Rajya Sabha that high inflation was mainly due to a low base. During these months last year, inflation was in the negative zone and the impact of low base may remain for a few more months till May-June. “I will not be surprised if it (inflation) reaches double digits in March,’’ Mukherjee said. Justifying the hike in duties on petroleum products, Mukherjee said he had the option to increase it outside Budget. “In a federal structure, I did it so that even states get a share of the Rs 26,000 crore that will come to the Centre. States will get a 32% share,’’ he said. Global financial services firms such as Goldman Sachs, Citi and Nomura are expecting the RBI to raise CRR (cash reserve ratio) — the money banks park with it overnight — by 50 basis points to suck out liquidity from the financial system. The RBI had, in its quarterly review, raised CRR by 75 basis points to 5.75%. This was expected to absorb Rs 36,000 crore from the system. Already, some banks such as ICICI, HDFC and Bank of India have raised interest rates. -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en.
