Expert Zone
Straight from the Specialists
When will the repo rate be reduced?
(The views expressed in this column are the author’s own and do not represent those of Reuters)
In his policy review on Oct. 30, Reserve Bank of India (RBI) Governor D. Subbarao stuck to his position that money cannot be made cheap when commodities are becoming expensive.
So, the repo rate has to stay where it is. When that cannot change, the reverse repo rate and the marginal standing facility rate have to stay put. That is what the RBI has been doing for six months now. The last time the repo rate was reduced was in April.
But the RBI has taken care to lubricate the wheels of the economy. There was liquidity deficit brought about by the wedge between deposit and credit growth of banks. Deposits have been increasing at 14 percent (y-o-y) while credit expansion was at 16 percent. To bridge the liquidity gap, Subbarao reduced CRR from 4.5 to 4.25 percent. That would put an additional 175 billion rupees of primary liquidity into the banking system.
Why financial planning is important
(The views expressed in this column are the author’s own and do not represent those of either Quantum AMC or Reuters)
The unexpected sight of a familiar pair of shoes placed on the shoe rack at home evoked memories of my dad, who died a few months ago.
RBI policy review: Subbarao could have taken a calculated risk
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The Reserve Bank governor kept interest rates unchanged on Tuesday with a marginal 25 basis points decrease in cash reserve ratio (CRR), disappointing stock markets and resulting in the Nifty going below 5640.
The crippling effect of QE3
(The views expressed in this column are the author’s own and do not represent those of Reuters)
It was tried twice before and it is being tried once again. Whether quantitative easing (QE3) will increase employment in the United States is questionable. But it will certainly disturb currency exchange rates of emerging market economies with related consequences.
Emerging priorities in the war against terrorism
(The views expressed in this column are the author’s own and do not represent those of Reuters)
There are different models that nations have adopted to fight insurgencies. Sri Lanka used all the forces at its disposal. The results, humanitarian aspects set aside, led to the insurgent movement being defeated comprehensively.
India Markets Weekahead: RBI policy review to be catalyst for markets
(The views expressed in this column are the author’s own and do not represent those of Reuters)
This was a listless week with the Nifty in the same band of 5640 and 5720 as the previous week, closing about 20 points lower at 5664. The festival season has begun but the mood on the street remains cautious.
RBI policy: Cut in repo rate imperative
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The Reserve Bank of India (RBI) is fixated on inflation and with that rigid mindset it is difficult to expect any liberalisation of monetary policy. But there are other parameters that have changed. Food inflation was down in September if that is any comfort. More than that, the budget deficit will be reduced with a cut in subsidies on diesel. There are also initiatives being taken on reforms. Obviously, the RBI needs to tune its policy to fit the new situation. If the RBI does change its stance, what instrument is it likely to use?
Time for real reforms, but low-hanging fruits remain
(The views expressed in this column are the author’s own and do not represent those of Reuters)
What seemed to be a lost cause merely three months ago has staged a remarkable comeback: the Indian government’s zeal for reform. After many months of dithering, the ruling Congress party remembered that it had the spine to stand up to fierce opposition from various state governments, finally getting its way on certain measures.
India Market Weekahead – Reforms, RBI rate cut could help Nifty break 5,800
There was consolidation within a narrow Nifty band of 5,640 and 5,720 last week, with a bit of volatility and a flat closing at 5,684.
Heavyweight results and political heat dominated the mood on the street. The government’s reform agenda continued with a Group of Ministers (GoM) panel clearing a watered down land acquisition bill, a development which was cheered by industry leaders only to be later vetoed by Congress chief Sonia Gandhi. The much awaited expose by activist-turned-politician Arvind Kejriwal failed to create ripples.
The RBI and its inflation dilemma
(Arvind Chari is a senior fund manager of Quantum Asset Management Company Private Limited. The views expressed in this column are his own and do not represent those of either Quantum AMC or Reuters.)
The wholesale price index number for September (7.81 percent) poses a dilemma for the Reserve Bank of India (RBI). With the finance ministry leaving no opportunity to make its case for lower interest rates and exhorting the RBI to take ‘calibrated risks’, the recent inflation data gives no comfort to the RBI to go ahead and confidently cut the repo rate in its October policy review.
