October 30, 2012 · 0 Comments
The Reserve Bank of India has announced cuts in cash reserve ratio (CRR) by 0.25% to 4.25%. The CRR cut move will inject a Rs17,500 crore liquidity into the banking system.
Meanwhile, the RBI has lowered the GDP growth forecast for 2012-13 to 5.8% from 6.5% projected earlier, even as it upped the year-end inflation estimate to 7.5 per cent from 7 per cent.
Average wholesale price based inflation forecast is revised upwards to 7.7 per cent from 7.3 per cent, said RBI, adding that the global growth prospects, both in advanced and emerging economies, have weakened and the euro zone troubles have affected business confidence and caused deceleration in global trade. It said sustaining the reform initiatives of the government would be the precursor for a turnaround in economic activity.
Earlier on Monday, Finance Minister P Chidambaram had unveiled a five-year road map for fiscal consolidation to promote investments, contain inflation and reduce fiscal deficit to about three percent to take India onto the high growth trajectory
Chidamabaram said that the government will continue its efforts to restrict fiscal deficit in the current financial year to 5.3 percent of the Gross Domestic Product (GDP) and reduce it to three percent by 2016-17.
The fiscal deficit was 5.8 percent in 2011-12. Economic growth slipped to nine-year low of 6.5 percent in 2011-12 and it is expected to fall further this fiscal. Referring to fiscal consolidation in 2012-13, Chidambaram expressed the confidence that government would be able to raise Rs 30,000 crore from disinvestment and Rs. 40,000 crore from sale of spectrum.
Further details awaited.
By Web Editor