indiabusinessview (https://indiabusinessview.com/category/economy-policy/page/2/)
Was it the harsh criticism of the government, especially the Prime Minister, in international circles that did the trick, or did the government just muster the courage required to the bite the reform bullet? The answer is unclear and perhaps the real story will be told in the coming weeks and even months.
Is the government on a suicide mission? Its move to hike diesel prices by 12% is a very steep hike in a sensitive fuel item, one which directly affects farmers, and has a cascading effect on a number of goods and services such as public transport, and food items.
The Reserve Bank of India held benchmark interest rates constant and left liquidity untouched, and did not cut the cash reserve ratios, as was being speculated. But that was not the big takeaway from the credit policy announcements.
The central bank has indicated that it is done with interest rate hikes, given signs of moderating inflation and slowing growth, and will now shift to using interest rate cuts to jumpstart growth again.
The Reserve Bank of India’s credit policy announcements met expectations, except of those people who thought today will signal the end of the rate hike juggernaut. The few who feared the RBI may hike the repo rate by 50 basis points were off the mark, however. The majority were expecting a 25 basis point hike, which is what the central bank has done.
Inflation for the month of July shows a slight dip to 9.22%, compared to the 9.44% seen in the previous month. One could argue if a drop of one-fifth of a percentage point is significant, but lower inflation, however small the actual decline, is a good thing.
The government releases overall inflation data monthly, while primary inflation data (food and non-food) and fuel price behaviour is released on a weekly basis.
Is this a blip or something more? India’s primary inflation data –includes food and non-food articles or basic inputs- shows inflation for the week ended July 30 at 12.22%, marking a sharp upturn from 10.99% in the previous week.
Speculation that the government may want a more pliant governor at the helm of the central bank proved to be bunkum. The government announced that D Subbarao would be the governor of the Reserve Bank of India, for two more years, providing continuity on the monetary policy front. He will now retire as the RBI governor on September 4, 2013.
Summary: Sebi has released two orders which will ask the National Securities Depository Ltd (NSDL) to conduct internal inquiries into systemic and procedural lapses that led to the IPO scam reaching such large proportions without being detected. Though the committee has clarified that its action is not punitive in nature, which might make one wonder what the fuss was all about, the issue is how individual responsibility –as asked by the committee- will be determined.
Entry load in the guise of transaction charge for subscription
Sebi has said that distributors will now be allowed to charge Rs 100 per subscription for investments below Rs 10,000. A first-time mutual fund investor will have to pay Rs 150.
Impact:
The Securities and Exchange Board of India, the capital market regulator, has made key changes to the existing takeover regulations. Sebi was acting upon the report of the Takeover Regulations Advisory Committee, which had submitted its recommendations in July 2010. In the interim, there was a change of guard at Sebi, which may have delayed the decision-making process.
Here are the main changes and impact: