The Reserve Bank of India (RBI) stuck to its trajectory of calibrated rate hikes in the current credit policy too. It hiked the repo rate by 25 basis points to 6.5% and the reverse repo rate also by 25 basis points to 5.5%. The repo rate is what banks pay to the RBI to borrow funds to meet short term liquidity needs and the reverse repo rate is what they get from the RBI, when they park surplus funds with the central bank.
The intertwining of agriculture and politics has usually meant that farmers and the consumers, especially those at the margin, suffer from government action or inaction. Food prices have been rising for a long period, at least a year, and show no signs of abating.
Today, the government announced the wholesale price index data (WPI) for the week ended November 14.
India’s goods traffic movement is a good lead indicator of how some core sectors are performing. Coal is shipped by rail. Steel plants transport ore and other raw materials to their plants, and transport finished steel back by rail. Other key commodities being transported by rail include fertilisers, foodgrains and crude oil. An increase in freight traffic either indicates higher demand for raw materials (coal is used by power and steel plants) or higher production because shipments are going up.
Business as a rule loves stability. They could not have asked for a better verdict from the 2009 elections. The UPA government has come back to power, much stronger with about 260 seats in a 543-seat parliament. In the previous election, it was much dependent on a number of smaller allies, hampering effective functioning especially on the economic front.
Here are some ideas to bring the economy back on the growth track. Some of these could be permanent, yet others could be temporary till the situation improves.
Already, inflation is resulting in the government taking steps that don’t seem logical. The Finance Minister has for long been cheering the growth story and cautioning the central bank taking any monetary steps, which might hit growth. And, he has helpfully been ‘requesting’ public sector banks not to increase interest rates, for good measure. Though the RBI is an autonomous body, the pressure on it to ignore the warning signals of rising inflation was evident.
India’s Union Budget 2008-09 has been greeted by three successive days of stock market declines, including the day it was announced. Some of the negative sentiment is more global in nature. But the Budget proposals do not seem to have gladdened investors. It tries to give a boost to demand by giving more cash for people to spend, taking a leaf from George Bush’s largesse, including farmers whose debt has been waived.
The Reserve Bank of India (RBI) stuck to its trajectory of calibrated rate hikes in the current credit policy too. It hiked the repo rate by 25 basis points to 6.5% and the reverse repo rate also by 25 basis points to 5.5%. The repo rate is what banks pay to the RBI to borrow funds to meet short term liquidity needs and the reverse repo rate is what they get from the RBI, when they park surplus funds with the central bank.
The intertwining of agriculture and politics has usually meant that farmers and the consumers, especially those at the margin, suffer from government action or inaction. Food prices have been rising for a long period, at least a year, and show no signs of abating.
Today, the government announced the wholesale price index data (WPI) for the week ended November 14.
India’s goods traffic movement is a good lead indicator of how some core sectors are performing. Coal is shipped by rail. Steel plants transport ore and other raw materials to their plants, and transport finished steel back by rail. Other key commodities being transported by rail include fertilisers, foodgrains and crude oil. An increase in freight traffic either indicates higher demand for raw materials (coal is used by power and steel plants) or higher production because shipments are going up.
Business as a rule loves stability. They could not have asked for a better verdict from the 2009 elections. The UPA government has come back to power, much stronger with about 260 seats in a 543-seat parliament. In the previous election, it was much dependent on a number of smaller allies, hampering effective functioning especially on the economic front.
A tough economic situation…
Here are some ideas to bring the economy back on the growth track. Some of these could be permanent, yet others could be temporary till the situation improves.
Already, inflation is resulting in the government taking steps that don’t seem logical. The Finance Minister has for long been cheering the growth story and cautioning the central bank taking any monetary steps, which might hit growth. And, he has helpfully been ‘requesting’ public sector banks not to increase interest rates, for good measure. Though the RBI is an autonomous body, the pressure on it to ignore the warning signals of rising inflation was evident.
India’s Union Budget 2008-09 has been greeted by three successive days of stock market declines, including the day it was announced. Some of the negative sentiment is more global in nature. But the Budget proposals do not seem to have gladdened investors. It tries to give a boost to demand by giving more cash for people to spend, taking a leaf from George Bush’s largesse, including farmers whose debt has been waived.
Here’s a look at what the Budget has really done.