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RBI statement that the agricultural Credit grew by 18.3 per cent (Rs 72,654 crore) of the incremental non-food bank credit is misleading. Agri Credit in fact grew by just 11% (Rs 31,851 crore) during the 11 month period of April 09 to Feb 10. There was an inexplicable and unseasonal increase in Agri Credit to the extent of Rs 41,000 crore in just one month of March 09 justifying the observation that “Through most of the nineties and the early noughties, the focus on commercial performance meant that PSBs cut back on their initiatives in rural areas. In recent years, they have succeeded in pushing more credit into agriculture but much of this is indirect lending. TT Ram Mohan, ET Bureau 190310. The same phenomenon is likely to be repeated again in March 10 showing commercial loans as agri indirect credit which is nothing but mathmagic in no way benefitting the farmers. Why and how the RBI allows such jugglery of Agri credit figures in the last month of the financial year is inexplicable. Why is the RBI a silent spectator to this kind of window dressing? Is it to help Banks to show on paper that they have achieved the mandated agri lending of 18%.
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RBI’S MONETARY POLICY: Still leaning on the side of growth
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If the choice was between high inflation and high interest rates, RBI has effectively chosen high inflation for now. This is because the token measures to raise interest rates or to absorb liquidity are unlikely to raise the interest rates in the economy. Many heads of banks have already stated this in response to the policy statement. If excess liquidity is leading to excessive demand, which, in turn, is leading to high inflation, then this will continue to be so, for now. The expectation is that increased supplies from agriculture and manufacturing will soon match the excess demand and inflation will come down to more acceptable levels. Fe 220410
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HIGH LIGHTS: |
CASH RESERVE RATIO RAISED BY 25 BASIS POINTS TO 6 PER CENT, CRR HIKE TO SUCK OUT RS 12,500-CRORE LIQUIDITY |
REPO RATE RAISED BY 25 BASIS POINTS TO 5.25 PER CENT.
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REVERSE REPO RATE HIKED BY 25 BASIS POINTS TO 3.75 PER CENT.
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| ECONOMIC GROWTH PROJECTION SEEN AT 8 PER CENT FOR 2010-11. |
FY’10 GDP GROWTH SEEN AT 7.2-7.5 PER CENT.
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| INFLATION PEGGED AT 5.5 PER CENT FOR 2010-11. PTI |
NOTES: |
The credit policy may not have changed the direction of the growth or cost curve drastically, but cumulative actions including beneficial policy regulations and instruments over the next 12-18 months would almost certainly get us there. BL 210410
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The Reserve Bank of India (RBI) has sent firm signal that it will stay the course on fighting inflation. BS 210410
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| NCAER pegs FY11 GDP growth at 8% |
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The economy is expected to grow by a healthy 8.1 per cent in the current fiscal driven by anticipated 4 per cent expansion in the farm sector and good showing by industry and services, the leading economic think-tank NCAER said.The one big change is in agriculture production which is likely to see a positive growth of around 4 per cent this year.For the past fiscal, the agency had projected a negative growth of 1.5 per cent for the agriculture sector. Industry and services sectors are also to contribute healthily to this fiscal, he said, adding, "we expect both to grow 8.5-9 per centThe think-tank pegged inflation at around 6.6 per cent during the fiscal which may start receding from the second half of the fiscal.
"We project an average rate of inflation for the year at 6.6 per cent for WPI. We are of the view that the inflation rate will decline in the second half of this fiscal, primarily because of the monsoon effect. Primary article prices would start coming down. PTI 260410
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| Rice procurement down at 26.5 mt |
| Rice procurement by the Government in the current marketing year, ending September 2010, has so far fallen by about three per cent to 26.5 million tonnes on account of lower production. The Centre had procured a record 33.68 million tonnes in the entire 2008-09 marketing year. |
| The largest rice contributor to the central pool this year so far has been Punjab, where procurement has increased by over 9 per cent to 9.27 mt compared with 8.47 mt a year ago. |
| On the other hand, rice procurement from Andhra Pradesh — a major contributor — has declined by 20 per cent to 4.29 mt so far this marketing year from 5.31 mt in the same period last year. |
| India’s rice production is estimated to decline to 87.56 mt in the 2009-10 season from the record level of 99.18 mt in the previous season. BL260410 |
| More mills in South opt for mechanical cane harvesting |
| Sugar mills – particularly in Tamil Nadu, Karnataka and Maharashtra – are taking to mechanical cane harvesting in a major way, in the context of rising costs as well as scarcity of manual labour. BL260410 |
| Wheat procurement up at 180 lakh tonnes |
| The Government said on Monday that wheat procurement during the 2010-11 marketing year has increased by about two per cent to 180.13 lakh tonnes since purchases began on April 1. |
| Punjab has contributed the most to the central pool at 91.33 lakh tonnes so far this year, though it is down two per cent from 92.75 lakh tonnes a year ago. |
| India’s wheat production was pegged at 80.28 million tonnes in 2009-10, which is marginally lower than the previous year’s record of 80.68 million tonnes. BL 260410 |
| AP sets farm loan target at Rs 38,000 cr |
| The Andhra Pradesh Government has set a target of giving agricultural loans of Rs 38,000 crore for the kharif and rabi seasons in 2010-11.Of this, crop loans would comprise Rs 26,500 crore, which include Rs 15,900 crore for the kharif and Rs 10,600 crore for the rabi seasons. The remaining Rs 11,500 crore would go to agri-allied sectors. 230410 |
| Direct Subsidy will save expenditure by half-Prof. Basu |
| “There is need to move over to direct subsidies to reach out to the poor. The government should spend on subsidies but it is important to see how it is being done. By introducing a direct subsidy system, the government can spend half the money it is spending now and get double the benefit by spending it on health and education for the poor. This is where the coupon plan comes in” Prof Basu told ET 220310 |
| NOTE: Why not transfer cash instead, preferably to the eldest female member of the beneficiary household? |
