RBI Makes Steepest Cut in Cash Reserve Ratio Since 2001
Reserve Bank of India (RBI) made the steepest cut since 2001 in CRR to cushion the economy from a global slowdown, after the rupee slumped to a record low.
The Reserve Bank of India lowered the cash reserve ratio to 7.5 percent from 9 percent effective tomorrow. The measure will release 60 thousand crores rupees into the financial system.
The move by Governor Duvvuri Subbarao comes after the Federal Reserve, the European Central Bank, the People's Bank of China and other monetary authorities slashed interest rates this week to avert a global recession.
Aug IIP at 1.3% versus 10.9% YoY
The August Index of Industrial Production (IIP) numbers have come in at 1.3% versus 10.9% year-on-year (YoY).
Manufacturing growth for August stands at 1.1% versus 10.7% (YoY), and the consumer durables growth for the period has come in at 5.1% against 6.2%.
Meanwhile, August capital goods number stands at 2.3% against 30.8% (YoY) and mining is at 4% versus 14.7% for the same period.
At the same time, the July industrial growth has been provisionally revised to 7.4% from 7.1%.
Speaking on the IIP numbers, M Govinda Rao, Director of National Institute of Public Finance and Policy (NIPFP) and member of the Economic Advisory Council (EAC) to the Prime Minister, said, "This is a significant deceleration. We are in industrial recession," adding that, "maybe we will have to revise the growth forecast now that there is a global financial crisis and a serious liquidity crunch in the Indian situation." However, he added that this was not the official position of the EAC.
Rao added that a 7% GDP growth rate is still achievable but said that we will have a much more serious problem during the next year.
Inflation at 11.80% vs 11.99%
Inflation for the week ended September 27 has come in at 11.80% versus 11.99% (week-on-week).
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