MEASURES TAKEN BY RBI TO CHECK INFLATION
The Reserve Bank of India (RBI) preferred to keep long-term as well as short-term indicative rates at the current level despite rising inflation and inflationary pressure.
Ø SLR the portion of deposits that banks are required to keep in government securities —
1. However, aiming at reducing liquidity and fighting the inflationary expectations, the RBI raised the Statutory Liquidity Ratio (SLR) —by 100 basis points to 25 per cent with effect from November 7.
Ø It retained the long-term indicative rate, the Bank Rate, at 6 per cent.
Ø The short-term indicative rates — the repo rate and the reverse
1. repo rate —repo rate is the rate at which the RBI provides liquidity to banks , kept unchanged at 4.75 per cent and
2. The reverse repo rate is the rate at which the RBI absorbs liquidity from banks , kept unchanged at 3.25 per cent, and
3. The Cash Reserve Ratio (CRR) of banks unchanged at 5 per cent.
Ø REFINANCE FACILITY
1. The limit for the export credit refinance facility, which was raised to 50 per cent of eligible outstanding export credit, is being returned to the pre-crisis level of 15 per cent.
Ø Further the two unconventional refinance facilities are being discontinued with immediate effect. special refinance facility for banks and
Ø special term repo facility for scheduled commercial banks for funding to mutual funds, non-banking financial companies (NBFCs), and housing finance companies —
Ø Among regulatory measures, the RBI increased the provisioning requirement for advances to the commercial real estate sector classified as ‘standard assets’ from 0.4 per cent to one per cent.
Ø INFLATION The projection for inflation at end-March 2010 is placed at 6.5 per cent with an upward bias. This is higher than that of 5 per cent inflation projected in July. However, the growth projection for Gross Domestic Product (GDP) has been retained at 6 per cent with an upward bias, unaltered from that made in the July review
DEVELOPING THE WESTERN CORRIDOR
The project to build a Delhi-Mumbai Industrial Corridor (DMIC) got the much-needed push, with the signing of two Memorandums of Understanding (MoUs) between the Japanese and Indian institutions.
Ø This Rs.22,000 crore project is expected to change the face of the western corridor, with the DMIC developing the entire hinterland.
Ø The DMIC Development Corporation and the Japanese JETRO are to promote 24 eco-cities or smart communities along the corridor,
1. While the Japan Bank for International Cooperation has offered a $75 million loan facility to help establish a Project Development Fund to kick-start the project.
Ø The DMIC project comprises a host of sub-projects for infrastructure development — for instance industrial estates, power plants, and logistics parks — which are to come up on either side of the proposed 1,483 km Delhi-Mumbai railway freight corridor.
1. The western corridor will connect Vadodara, Ahmedabad, Palanpur, Jaipur, Rewari, Tughlakabad, and Dadri.
Ø The foundation stone for the rail corridor was laid by Prime Minister Manmohan Singh way back in October 2006.
1. The western rail freight corridor will link the Jawaharlal Nehru port and other ports in Gujarat to the industrial belts in the western, central, and northern regions extending up to New Delhi
2. A separate dedicated corridor to the east has also been planned by the Indian Railways, and the work on it was launched in February.
Ø The dedicated corridor is meant to focus exclusively on carrying freight, and the project, conceived in 2004-05, envisages 2,700 km of new freight lines and about 5,000 km of feeder lines.
