8/5/2014 4:08:51 PM
|written By : Team India Se|
In a move that many economists have been anticipating, the Reserve Bank of India has injected nearly Rs 40,000 crore into the banking sectors’ lendable resources by bringing down the Statutory Liquidity Ratio by 50 bps to 22 per cent. This is being viewed as one of the several key steps the Government would have to take in order to bring back momentum in the sluggish economy and encourage investment.
However, it kept its key policy repo rate unchanged while also warning about inflationary risks should a shortfall in monsoon rains spark a surge in food prices.
"With some continuing uncertainty about the path of the monsoon, it would be premature to conclude that future food inflation, and its spill-over to broader inflation, can be discounted," the RBI Governor Dr Raghuram Rajan said in a statement.
Food price inflation remains one of the biggest risks for India, despite government measures to curb hoarding of food articles and setting limits on the export of onions and potatoes, two staples in Indian cooking. "The upside risks to the target of ensuring CPI inflation at or below 8 per cent by January 2015 remain, although overall risks are more balanced than in June," the RBI said in the statement. "It is, therefore, appropriate to continue maintaining a vigilant monetary policy stance as in June, while leaving the policy rate unchanged."