RBI hikes lending rates | It’s a move to curb inflation: Govt

RBI hikes lending rates | It’s a move to curb inflation: Govt

Reuters

TimePublished on Tue, Jul 29, 2008 at 12:20, Updated at Tue, Jul 29, 2008 in Business section

TagsTags: Rbi, Credit Policy , Mumbai
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UP, UP AND AWAY: RBI raised its key lending rate by 50 basis points to a seven-year high of 9 pc.

UP, UP AND AWAY: RBI raised its key lending rate by 50 basis points to a seven-year high of 9 pc.

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RBI move to contain inflation, says Govt

RBI raised its key lending rate to a seven-year high on Tuesday to curb inflation.

* Reddy’s dilemma: to raise credit rates or not
* Upward surge in interest rates to continue

Mumbai: The Reserve Bank of India (RBI) raised its key lending rate by 50 basis points to a seven-year high of 9.0 per cent on Tuesday to curb inflation, now running close to 12 per cent, and dampen inflationary expectations.

The RBI also raised the cash reserve ratio, the proportion of funds that banks must keep on deposit with it, by 25 basis points to 9.0 per cent to limit the amount of inflation-stoking surplus cash in the banking system.

It will fully take effect by Aug 30. Most analysts polled by Reuters last week had expected the central bank to follow up its aggressive policy tightening in June with another rate rise after an increase in state-set fuel prices pushed inflation to its highest since 1995.

The majority saw no change in the reserve ratio. The central bank left its reverse repo and bank rates unchanged.

Highlights

* Short-term lending rate Repo raised by 0.5 % to 9 %

* Cash Reserve Rato raised by 0.25 % to 9 % from Aug 30

* Reverse repo and bank rate unchanged at 6 %

* RBI lowers GDP growth rate projection to 8% from 8-8.5%

* RBI to attempt to cool inflation from 11-12% to 7% by March, 2009

* Earlier objective was to bring down inflation to close to 5 % by March, 2009

* RBI to continue to strive to bring down inflation to 3 % in medium-term

* Liquidity management to be top priority

* Price stability, orderly conditions in financial market to be given high priority

* Early signs of some moderation in money supply.

Nano first batch to be ready by Sept 15

Nano first batch to be ready by Sept 15
22 Jul, 2008, 0541 hrs IST,Sutanuka Ghosal, ET Bureau

Nano
KOLKATA: Tata Motors’ Singur factory has swung into high gear. The first batch of 25 Nanos, internally called the ‘pilot batch’ by the Tatas, will be ready by September 15—precisely a fortnight before the Rs 1-lakh car is scheduled to hit the road.

The Tatas have set an August 15 equipment-supply deadline for key vendors—Caparo Group, JBM Auto, Rucha Engineering and Rasandik Engineering—who will be supplying the core sheet metal for Nano.

Tata Motors has also asked its remaining component suppliers, bulk of whom are setting up units at the adjacent Singur vendor park, to rush in their supplies within the first week of September.

Tata Motors circles said the vendors had been told that even if their new facilities in Singur are not up and running by September first week, they would have to ship Nano components from their other units within the stipulated time.

At present, Caparo, JBM Auto, Rucha Engineering and Rasandik Engineering are setting up plants in Singur. When contacted, Rucha Engineering managing director Umesh Dashrathi said: “Sheet metal is an important part of a car required for its outer body structure. We have been asked by Tata Motors to be ready with our supplies by mid-August.”

Indications are the formal trial run of Nano pilot batch will kick off shortly after September 15. When contacted, Tata Motors spokesperson Debasis Ray told ET: “Tata Motors has said that Nano will be launched in 2008. The company has also said the plant at Singur is working towards production in the last quarter of the year.”

However, the spokesperson remained tightlipped on the number of Nanos that will initially roll out from Singur in early-October. Tata Motors plans to roll out 50,000 cars between October 2008 and March 31, 2009.