RBI's Credit Policy

The Reserve Bank of India has raised repo and reverse repo rates by 25 basis points each on March 17, 2011. The repo rate is 6.75%, reverse repo rate 5.75% and the CRR has been left unchanged at 6%.

 RBI's monetary policy review:

• GDP growth for 2010-2011 to be 8.6%.
• High commodity prices pose threat to GDP growth.
• IIP is weak, but other indicators like tax, exports, credit point to growth momentum.
• March 2011 whole sale price inflation expected at 8% vs earlier estimate of 7%.
• Increase in oil, fertilizer subsidies could put pressure on expenditure.
• Current Account Deficit (CAD) estimated to be lower, at 2.5% of GDP.
•  Focus on longer term capital inflows to sustain balance of payments.
• Non- food credit growth at 23%, estimate of 20% in Feb (YOY).
• Net liquidity injection through Liquidity Adjustment Facility down on higher govt spending.
• Till March 16: Rs. 68000cr Vs February: Rs. 79000cr Vs January: Rs. 93000cr.
• Temporary pressure on liquidity in second half of March due to advance tax payment.

Mr. Rajiv Kumar ( Director General, FICCI) said:

Below link shows industry experts views on 25 bps rate hike:

http://www.moneycontrol.com/video/economy/howindustry-experts-viewing25-bps-rate-hike_530149.html