Don't get surprised if RBI's anti-inflationary measure while addressing one problem aggravates another, says Manish K. Pandey
As per onlookers, Duvvuri Subbarao, Governor, Reserve Bank of India (RBI), seemed little nervous while announcing the Q3 Monetary Policy Review last week on January 29, 2010. And why not? After all, he had a challenging task at hand – to tame price instability without jeopardising the country’s economic growth. Although he hiked the cash reserve ratio (CRR) of banks to 5.75 per cent from 5 per cent (this was higher than market expectations of a 50 bps hike on the CRR), and left the repo, reverse repo and bank rates unchanged at 4.75 per cent, 3.25 per cent and 6 per cent respectively, but then by doing so, was he really able to achieve what he wanted?
If one looks at the overnight money market rates, they have been close to the lower band (3.25 per cent) of the liquidity adjustment facility (LAF) for quite some time now, reflecting the huge liquidity bulge. In fact, the banking system has been depositing over Rs.1 trillion on a daily basis under the LAF window of the Central Bank during the current fiscal.
Considering this, the two-phased hike in CRR (RBI plans to implement the CRR hike in two stages – a 50 bps increase on February 13 and the remaining 25 bps increase on February 27), which is expected to squeeze out Rs.360 billion of liquidity from the system, is certainly not going to make much of a difference to the ongoing supply-demand imbalance. Further, an immediate hike in interest rates is also an unlikely phenomenon (most bankers have already pointed this out). So the moot question is: Did Subbarao make a right choice by just increasing the CRR for now? Should he have raised the key policy rates as well? ... Or rather left the both untouched?
As per onlookers, Duvvuri Subbarao, Governor, Reserve Bank of India (RBI), seemed little nervous while announcing the Q3 Monetary Policy Review last week on January 29, 2010. And why not? After all, he had a challenging task at hand – to tame price instability without jeopardising the country’s economic growth. Although he hiked the cash reserve ratio (CRR) of banks to 5.75 per cent from 5 per cent (this was higher than market expectations of a 50 bps hike on the CRR), and left the repo, reverse repo and bank rates unchanged at 4.75 per cent, 3.25 per cent and 6 per cent respectively, but then by doing so, was he really able to achieve what he wanted?
If one looks at the overnight money market rates, they have been close to the lower band (3.25 per cent) of the liquidity adjustment facility (LAF) for quite some time now, reflecting the huge liquidity bulge. In fact, the banking system has been depositing over Rs.1 trillion on a daily basis under the LAF window of the Central Bank during the current fiscal.
Considering this, the two-phased hike in CRR (RBI plans to implement the CRR hike in two stages – a 50 bps increase on February 13 and the remaining 25 bps increase on February 27), which is expected to squeeze out Rs.360 billion of liquidity from the system, is certainly not going to make much of a difference to the ongoing supply-demand imbalance. Further, an immediate hike in interest rates is also an unlikely phenomenon (most bankers have already pointed this out). So the moot question is: Did Subbarao make a right choice by just increasing the CRR for now? Should he have raised the key policy rates as well? ... Or rather left the both untouched?
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abilities and a better immune system will also contribute to make this specimen of the soldier truly dominant. And suspiciously similar to Wolverine, sans the claws. The fascination with the super soldier is not new; mythology is littered with the ultimate warrior’s tales from Achilles to Arjuna. And today’s convergence of technology – in the fields of nanotechnology, biology, chemistry and of course, computing – has resulted in the best chances armies have had in decades to go full speed ahead. Says Major Gen. Thapliyal, “I don't think we can ever come to a situation where people can be made immortal, but there definitely exists training of soldiers to better their reflexes, their skills, their destructive and safeguarding capabilities, which one might say is close to being a super soldier. These soldiers are trained to use high-end gadgets and perform super quick operations with high destruction chances.” 
a significant time in contributing to the direct selling industry in India; and even envisions India becoming the biggest market for Oriflame internationally. And the key to this? Providing the best natural Swedish beauty products at affordable prices all over India. Fredrik exclaims, “Asia, as a whole, contributes to around 6% of our turnover; and India is one of the major contributors – of course, as it is one of our top three high priority markets.”
repercussions of ever-increasing oil prices. There were two wheelers and four wheelers rolled out of the assembly lines all across the country and auto financers were running after prospective ‘drivers’ and ‘riders’, everywhere… Cheap funds, cheap bikes, cheaper cars (with that ‘interest’ string attached), but ‘expensive’ oil! That was the buzz around, and India was worried (and so were the Americans, of course!). It felt like wartime, with guns but no bullets, with automobile engines all around but perhaps no oil to vroom around! And the financials of the auto majors? Oh! They stood tall and pretty, prouder than bearing the ‘seal of the eagle’! Happy Capitalism was the dream word, but no more a reverie!
for all we care, given the completely controversial and practically outdated methodology on which this concept thrives! But we’ll cross the damned Kwai bridge when we reach it. First, the ides of March. There is no question that global warming has been the most talked about phenomenon in the last century and in this one too. Environmentalists have more often than not been sidelined as the trouble creators. Surprisingly, the most impactful of all the environmentalists has perhaps been the one who has been least known – the man who is credited with inventing carbon trading (pundits call him the father of carbon trading) – Richard Sandor! The man gave an economic value to efforts dealing with reduction in pollution, the most crucial aspect of environment. Sadly, what he envisioned is perhaps miles off what is becoming of this ‘business’.
from the spillovers of the on going financial crunch and remain afloat. Bank of America (BoA), the third largest bank of the United States, has already got into the cash saving mode by adapting cost cutting measures. It has laid down plans of slashing up to 35,000 jobs spread over a period three years. The objective is to save a whopping $7 billion and offset the erosion of business inflicted by global economic downturn. However, it has poured cold water on reports of shedding its 19.13% stake in China Construction Bank at a discount of almost 13-17% to raise around $3 billion. The news was enough to have a negative impact on the market standing of the Chinese lender, as its stock prices nose dived by almost four per cent. Thus, the company (BoA) is ready to adopt any method to cut cost but not by selling off stakes. 
comparably lower troughs in oil prices has made many run for cover. The volatility has resulted in unprecedented economic turmoil to say the least. From skyrocketing highs to touch the peaks of $147 per barrel in July, global oil prices have fallen below $114 per barrel when the magazine went for print. Well, the downward trend, as expected by many, is not going to bring much of a respite from the oily blows that the global market has been taking below the belt since last year.
highly vulnerable to the new form of terrorist attack, bio-terrorism, defined as spreading and injecting virus, bacteria or other germs (called biological agents) in people to cause illness, even death. Such agents, which are abundantly available in nature, have been the most sophisticated and recent form of identified terror attacks.